USD weakens further despite hawkish comments from FED Collins and Barkin

Today's mixed data from the American labor market and speculation that Chinese authorities may ease strict Zero Covid policy caused euphoria among investors, which at the same time led to a weakening of the dollar. Even the hawkish comments of two members of the Federal Reserve did not spoil upbeat sentiment in the stock market.

Fed Collins said its time for the US central bank to shift focus from the size of rate hikes to the ultimate level and rates may need to rise more than she anticipated in September. In her opinion it is premature to speculate on where the rate hike cycle will end.

Collins believes that price stability can be achieved with a big slowdown  and see signs that inflation surge is starting to moderate. In her opinion it makes perfect sense for the Fed to switch to smaller rate increases. Collins anticipates that the terminal funds rate will be higher than the Fed's September forecast, the data has broadened her view on the peak rate level.

Richmond Fed President Thomas Barkin told CNBC that policymakers  could potentially have a higher end-point on rates. Even if it's slower, it could be a potentially higher end point for rates, even above 5%, but this is not a plan. He notices that the labour market remains tight, with little help from the labour supply side. Barkin is not sure what FED will do in December, many indicators remain to be seen. Nevertheless the Fed has its foot on the brake.

NZDUSD pair bounced off major support at 0.5540 in the mid-October and is currently testing key resistance around 0.5910 which is marked with upper limit of the 1:1 structure and 78.6% Fibonacci retracement of the upward wave launched in March 2020. Should break higher occur, upward move may accelerate towards local resistance at 0.6065, which is marked with previous price reactions. Source: xStation5

US500 rose sharply on Friday, however buyers still struggle to break above key resistance at 3800 pts. Source: xStation5