- The dollar gains momentum after the US data and as Wall Street trims gains.
- Market participants await Fed Chairman Powell’s speech.
- NZD/USD is trading between 0.6250 and 0.6150.
The NZD/USD hit a high of 0.6250, the highest level since August 19, and then pulled back towards 0.6200. The decline from the multi-day high took place amid a recovery in the US dollar.
The USD started to gain momentum after the release of US economic data. The second reading of GDP for the second quarter showed that the economy contracted at an annualized rate of 0.6%, better than the previous estimate of -0.9%. Another report showed jobless claims (initial and continuing) fell to the lowest level in weeks.
The Jackson Hole symposium began on Thursday. The key event will be Jerome Powell’s speech on Friday. His words are likely to have a significant impact on financial markets. Market participants will be looking for clues about the path of the Fed’s monetary policy. Philadelphia Fed President Patrick Harker said Thursday that he wants to see the next inflation reading before deciding what to do at the meeting. September FOMC.
Earlier on Thursday, a report showed that New Zealand retail sales declined 2.3% in the second quarter. “It was the second consecutive quarter of weaker sales and it increases the odds that the broader economy will also contract. Second quarter GDP data is due out on September 15. There is no consensus yet, but the contraction is likely to be worse than the -0.2% quarterly recorded in the first quarter,” said analysts at Brown Brothers Harriman.
Short term outlook
NZD/USD continues to trade near the weekly low and crucial support at 0.6150. If it breaks down, an acceleration to the downside seems likely. To the upside, the recovery found resistance at 0.6250, which contains the 200 hourly SMA.
Heading into the Asian session, a drop below 0.6200 would expose the daily low at 0.6175 and then the recent low. While a break above 0.6250 should clear the way for an extension of the recovery.
Technical indicators on the daily chart remain biased to the downside, despite the consolidation of the last four days. Below 0.6150, a test of the year-to-date low at 0.6057 looks likely.
Technical levels
Source: Fx Street
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