- NZD/USD jumped from a six-week low on Monday from around 0.6100.
- The Fed’s favorite inflation gauge fell, though Powell did not factor in the data, saying a month’s worth of data is not enough to pause.
- NZD/USD Price Analysis: Still trending down, so a test of year lows around 0.6060 is expected.
The NZD/USD rebounds from 6-week lows, regaining ground during the American session, amid a risk-off trading session, courtesy of aggressive rhetoric from the Fed’s Powell, commenting that even with the US economy slowing down. In the US, the Fed would continue to raise rates to moderate inflation.
During the day, the NZD/USD opened near the lows of the day, around 0.6100. However, as the US dollar weakened, the New Zealand dollar rose, reaching a daily high of 0.6167, some 20 points above current trading levels. At the time of writing, the NZD/USD is trading at 0.6154,
NZD/USD gains come courtesy of broad US dollar losses. Falling 2-year US Treasury yields, after hitting 15-year highs, spurred some dollar weakness, strengthening most G8 currencies against the dollar, despite the US Federal Reserve Chairman Jerome Powell’s hard-line speech at Jackson Hole.
He said the Fed’s overarching goal is to bring inflation down toward its 2% target, even if that means slow growth and “pain for households and businesses.” He added that “without price stability, the economy doesn’t work for anyone.”
Elsewhere, US economic data on Friday revealed that the core PCE deflator, the Fed’s favorite measure of inflation, rose 0.1% mom, less than estimated. However, the three-month annualized figure remains high, and while Powell welcomed the data, he reiterated that the Fed needs to get into tightening territory. Later in the day, UoM Consumer Sentiment improved to 58.2, reflecting lower gasoline prices.
What must be considered
On the New Zealand economic calendar will be ANZ Business Confidence for August, estimated at 52. Meanwhile on the US economic calendar will be US Consumer Confidence, Fed Statements and the ISM Manufacturing PMI, along with the US Non-Farm Payrolls report.
NZD/USD Price Analysis: Technical Outlook
The NZD/USD daily chart shows the pair with a bearish bias. Confirmation of the above is that the daily EMAs are above the price, the RSI is in negative territory, and the successive series of lower highs and lower lows cement the downtrend. Therefore, the first support for the NZD/USD would be 0.6100. Once broken, the next support would be the low for the year at 0.6060.
Source: Fx Street
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