Fed Sees Interest Rates Rising in 2023

USD STRENGTHENS, EQUITIES RETREAT ON HAWKISH FED

The US dollar surged against all the other major currencies on Wednesday and during the Asian session Thursday. It gained the most ground versus CHF, EUR, AUD and NZD.

DJIA — TECHNICAL OUTLOOK

The DJIA index drifted lower yesterday and closed the trading session well in the red. The price is currently trading well below a short-term tentative downside resistance line drawn from the high of May 10th. Although we may see some further declines in the upcoming days, these may still be classed as temporary corrections, if the index respects the medium-term tentative upside line drawn from the low of January 31st. Overall, we will stay positive.

NZD/USD — TECHNICAL OUTLOOK

After NZD/USD was seen balancing for a few days at the end of last week and then in the beginning of this week just slightly above a medium-term upside support line taken from the low of October 20th, the pair eventually violated that line and drifted south. Further declines were fuelled by strengthening USD, after the FOMC statement yesterday. The rate is now also trading below a short-term downside resistance line taken from the high of May 27th. Even if we see a rebound at some point soon, as long as that downside line remains intact, another slide might be possible. We will take a bearish approach overall.

AS FOR THE REST OF TODAY’S EVENTS

During the Asian session, we already got New Zealand’s GDP for Q1 and Australia’s employment report for May. New Zealand’s GDP came in better than expected, diminishing the chances for a lower OCR by the RBNZ even further, while Australia’s jobs report disappointed, adding to the chances for the RBA to extend its QE purchases at the upcoming gathering.

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