New Zealand Dollar flies after Powell speech, NZ Retail Sales beat forecast

The New Zealand dollar has steadied on Monday. In the European session, NZD/USD is trading at 0.562, down 0.07% on the day. On Friday, the New Zealand dollar shot up 0.82%, its best one-day performance since June.

US Dollar sinks after Powell's signals a rate cut

The US dollar was hammered on Friday, posting sharp losses against all the major currencies, including the New Zealand dollar. This followed Federal Reserve Chair Powell's dovish speech at a meeting of central bankers' in Jackson Hole.

Powell did not explicitly say that the Fed would cut rates next month and noted that inflation remained a risk due to tariffs. He expressed concern about the labor market, saying that "downside risks to employment are rising" and such risks could materialize quickly.

The markets focused on Powell's warning about the employment outlook and bumped up expectations that the Fed will cut rates at the September 17 meeting. As well, a second cut before the end of the year is a strong possibility.

The Fed has been in a prolonged wait-and-see stance, holding rates since December 2024. With inflation largely under control and the labor market showing wider cracks, the Fed is likely to respond with a rate cut or two before the end of the year.

New Zealand Retail Sales rise to 0.5%

New Zealand's retail sales for the second quarter rose by 0.5% q/q, down from 0.8% in Q1 but above the market estimate of 0.2%. Annually, retail sales jumped 2.3%, up sharply from 0.7% in Q1. The positive release indicates that consumers are spending in response to lower interest rates. The Reserve Bank of New Zealand has aggressively chopped rates and has hinted that the easing cycle will continue.

NZD/USD technical

• NZD/USD is testing support at 0.5860, followed by 0.5854 and 0.5843.
• 0.5871 and 05877 are the next resistance lines.