• The Fed hiked by 25 bps as
  expected and kept everything unchanged at the last meeting.
• Fed Chair Powell reaffirmed their data dependency
  and kept all the options on the table.
• The US CPI last
  week came in line with expectations, so the market’s pricing remained roughly
  the same.
• The labour market
  displayed signs of softening although it remains fairly solid.
• The other important economic data like the ISM
  Services PMI, Jobless Claims and Retail Sales all beat expectations recently.
• The Fed members are leaning towards a pause in
  September and the next decision will still be dictated by the economic data.
• The market doesn’t expect the Fed to hike at the
  September meeting, but there’s now basically a 50/50 chance of a hike in
  November.

Japan:

• The BoJ kept everything unchanged as expected at the last meeting but
  tweaked the YCC policy keeping the target band unchanged but giving more
  flexibility with a hard cap at 1.00%.
• The Japanese CPI data surprised to the upside
  recently with the core-core reading reaching again the previous high.
• The Unemployment Rate surprisingly increased recently,
  although it remains near cycle lows.
• BoJ Governor Ueda last week said that his focus is on
  a quiet exit from the monetary easing and added that the BoJ should have enough
  data by year end to decide how to proceed.
• The Japanese wage data last week showed a slowing in wage
  growth, and this is something the BoJ focuses on particularly.

USDJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see
that the USDJPY pair looks to be trading within a rising channel with the upper
bound and the 150.00 handle being the target on the upside. The recent bounce
on the black trendline and the
red 21 moving average led to a
rally into the 147.85 resistance where
the price started to struggle. A break above the resistance should lead to a
rally into the 150.00 handle, while a break below the trendline might cause a
selloff into the 145.00 support.

USDJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price
action around the resistance has created an ascending triangle.
Generally, when the price breaks out of such patterns, we can see a strong and
sustained move following on. So, a break to the upside should see more buyers
piling in and target the 150.00 resistance, while a break lower is likely to
see more sellers stepping in and target the 145.00 support.

USDJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price is testing the trendline again which is where we can expect the buyers to
pile in as well with a defined risk below the trendline to target a break to
the upside.

Upcoming Events

This week has just a couple of important economic
releases with the FOMC and BoJ rate decisions being the highlight. Tomorrow,
the Fed is expected to keep rates unchanged, and the market will focus more on
the Dot Plot and Fed Chair Powell’s press conference, although he’s likely to
repeat that they remain data dependent. On Thursday, we will get the US Jobless
Claims data. On Friday, we will see the latest Japan CPI report and then move
on to the BoJ policy decision where the central bank is expected to keep everything
unchanged. Later in the day we conclude the week with the US PMIs data.

This article was written by FL Contributors at www.forexlive.com.

• The waiting game continues…
• OECD raises global growth outlook for the year
• ECB are done hiking, rate cuts seen in Q3 next year – poll
• ECB’s Villeroy: We will maintain interest rates at 4% for a sufficiently long time
• Eurozone July current account balance €20.9 billion vs €35.8 billion prior
• Eurozone August final CPI +5.2% vs +5.3% y/y prelim
• Switzerland August trade balance CHF 4.05 billion vs CHF 3.13 billion prior

Markets:

• CAD leads, JPY lags on the day
• European equities mixed; S&P 500 futures up 0.1%
• US 10-year yields flat at 4.318%
• Gold up 0.1% to $1,935.33
• WTI crude up 0.9% to $92.34
• Bitcoin up 1.3% to $27,131

It was a relatively quiet session as markets continue the waiting game ahead of the main events later this week.

The dollar is mostly little changed but traded lower against the commodity currencies, with USD/CAD in particular being down 0.4% to 1.3427 currently. That comes as oil prices continue to surge higher in an otherwise slower start to the week for broader markets. Brent crude briefly clipped above $95 but is still sitting up 0.5% to $94.87 at the moment.

Meanwhile, outside of some light gains in the aussie and kiwi, the rest of the major currencies are more stuck in narrower ranges so far on the day.

In the equities space, things are slightly choppier but there remains little interest after the tepid moves in Wall Street yesterday. Investors seem settled to wait on the Fed tomorrow and the same can be said for Treasuries.

And so, the wait continues..

This article was written by Justin Low at www.forexlive.com.

US:

• The Fed hiked by 25 bps as
  expected and kept everything unchanged at the last meeting.
• Fed Chair Powell reaffirmed their data dependency
  and kept all the options on the table.
• The US CPI last
  week came in line with expectations, so the market’s pricing remained roughly
  the same.
• The labour market
  displayed signs of softening although it remains fairly solid.
• The other important economic data like the ISM
  Services PMI, Jobless Claims and Retail Sales all beat expectations recently.
• The Fed members are leaning towards a pause in
  September and the next decision will still be dictated by the economic data.
• The market doesn’t expect the Fed to hike at the
  September meeting, but there’s now basically a 50/50 chance of a hike in
  November.

New Zealand:

• The RBNZ kept its official cash rate unchanged at the
  last meeting while stating that it will remain at the restrictive level for the
  foreseeable future to ensure that inflation comes down back to target.
• The recent New Zealand inflation and employment data surprised to the upside but
  the PMIs continue to slide further into contraction.
• The wage growth has also missed
  expectations and it’s something that the central banks are watching closely.
• The recent New Zealand Retail Sales beat expectations although the data
  remains deeply negative.
• The RBNZ is expected to keep the
  cash rate steady at the next meeting.

NZDUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the NZDUSD pair
is currently pulling back after a huge selloff from the key 0.6389 resistance. The divergence with the
MACD was a
signal that the bearish momentum was waning, and a correction was due. The red
21 moving average is
acting as a dynamic resistance at the moment, but a break above it should lead
to a rally into the 0.60 handle.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that on this
timeframe we have an uptrend as the price is printing higher highs and higher
lows. Although the price action remains messy, we have clear and defined
levels. In fact, a break above the 0.5933 resistance should lead to rally into the
next resistance around the 0.60 handle. That’s where we should find strong
sellers piling in with a defined risk above the level to target new lows.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see the range
between the 0.5895 support and the 0.5933 resistance. The price has been stuck
in this range for over a week and at some point we should see a breakout.

Upcoming Events

This week has just a couple of important economic
releases with the FOMC rate decision tomorrow being the highlight. The Fed is
expected to keep rates unchanged, and the market will focus more on the Dot
Plot and Fed Chair Powell’s press conference, although he’s likely to repeat
that they remain data dependent. Moving on to Thursday, we will see another US
Jobless Claims report, while on Friday we conclude the week with the US PMIs
data.

This article was written by FL Contributors at www.forexlive.com.

All 70 economists polled anticipate that the ECB is to hold the deposit rate unchanged at 4.00% until year-end. Meanwhile, 41 of 70 economists (~59%) see the ECB waiting until at least Q3 next year i.e. July at the earliest before taking the step to cut rates. Here are some of the comments from the poll:

„It will probably be some time before the ECB will describe it as such, but 4.00% is likely t o be the terminal rate, in our view. Lagarde apparently did not want to say rates have peaked… However, the hurdle to a further hike does feel relatively high.“ – Deutsche Bank

„Another rate hike is not our base case, but there is a fair risk a hike could materialise if wage growth and inflation remain strong through December.“ – Rabobank

In terms of the balance of risks for rate cuts, 23 of 38 economists replying to the question say that the risk is that it might be earlier than they forecasted.

This article was written by Justin Low at www.forexlive.com.