NZD/USD consolidates above 0.5850 on risk appetite, Fed cuts hopes

The New Zealand Dollar appreciates against the US Dollar following Trump's dovish pivot.
Powell rattled markets on Friday, opening the doors for interest rate cuts.
New Zealand's stronger-than-expected retail sales figures have provided an additional supoport to the NZD.

Guillermo Alcala FXStreet

New Zealand Dollar holds a moderately positive tone against the US Dollar on Monday, extending the rebound from Friday’s lows sub-1.5800 to the upper range of the 1.5800s. A softer Dollar amid rising hopes of Fed cuts and the upbeat New Zealand retail consumption data is keeping the NZD buoyed.

The Greenback remains depressed on Monday after a sharp reversal last Friday, following dovish comments from the Federal Reserve Chairman, Jerome Powell, at the Jackson Hole meeting of central bankers.

Powell, for the first time this year, showed higher concerns for the downside risks to the economy than for the inflationary impact of tariffs to acknowledge that the bank will be forced to adopt a less restrictive monetary policy to support economic growth.

Powell’s change of tone boosted investors’ hopes that the bank will cut rates in September, which triggered a risk-on reaction that is still going on on Monday.

In New Zealand, domestic data contributed to underpinning support for the Kiwi. The second quarter’s Retail Sales have shown a steady consumer spending with a 0.5% quarterly growth from the 0.8% reading seen in the previous quarter, beating expectations of a slowdown to 0.2%

Economic Indicator

Retail Sales (QoQ)

The Retail Sales data, released by Statistics New Zealand on a quarterly basis, measures the volume of sales of goods by retailers in New Zealand. Changes in Retail Sales are widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the QoQ reading comparing sales volumes in the reference quarter with the previous quarter. Generally, a high reading is seen as bullish for the New Zealand Dollar (NZD), while a low reading is seen as bearish.

Why it matters to traders?

The quarterly release of Retail Sales by the Statistics New Zealand directly reflects on the country’s consumer spending. Stronger sales could drive inflation higher, leading the Reserve Bank of New Zealand (RBNZ) to hike interest rates so as to maintain its inflation-containment mandate. Thus, the indicator impacts the New Zealand dollar significantly. A better-than-expected print tends to be NZD bullish. The data is published about a month and a half after the quarter ends.

Economic Indicator

Retail Sales ex Autos (QoQ)

The Retail Sales data, released by Statistics New Zealand on a quarterly basis, measures the volume of goods sold by retailers in New Zealand excluding the sector of motor vehicles and parts. Changes in Retail Sales are widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the QoQ reading comparing sales volumes in the reference quarter with the previous quarter. Generally, a high reading is seen as bullish for the New Zealand Dollar (NZD), while a low reading is seen as bearish.

Why it matters to traders?

retail

Author

Guillermo Alcala

FXStreet

Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.

AUD/USD flirts with 0.7000, lowest since early August amid bullish USD

AUD/USD hits a fresh low since early August during the Asian session on Friday and looks vulnerable near 0.7000 after breaking below the 200-day SMA overnight. Against the backdrop of the hawkish Fed, a two-day rally in oil prices revives inflation fears and continues to push US bond yields to multi-year highs. Adding to this, geopolitical risks lift the US Dollar to a two-month high, overshadowing RBA rate hike bets and weighing on the pair.

USD/JPY pulls back from three-week high after failing near 159.00

USD/JPY edges lower during the Asian session on Friday, stalling its recent strong move to a three-week high of 159.00 as Japanese Yen bears turn cautious amid intervention fears. Meanwhile, the US Dollar retains a strong bullish undertone as the Fed's hawkish outlook and oil-driven inflation fears continue to push US bond yields to multi-year peaks. Furthermore, the BoJ's dovish rate hike last week might cap JPY and support spot prices.

Gold treads water below $4,300

Gold grabs some buying attention and advances marginally at the end of the week, partially retracing the weekly decline, although it is still navigating below the key $4,300 mark per troy ounce. The fresh selling bias on the Greenback and the modest decline in US Treasury yields appear to support the humble advance in the precious metal.

Crypto Today: Bitcoin and Ethereum edge lower, XRP extends recovery as macro headwinds weigh

The broader cryptocurrency market is consolidating on Friday, with Bitcoin paring losses slightly above $84,000. Ethereum declines in tandem with BTC. Ripple (XRP), meanwhile, paints a different picture.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Federal Reserve (Fed) and the Bank of Japan (BoJ) have just done something remarkably similar. Both central banks raised interest rates by 25 basis points (bps) last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Fed and the BoJ have just done something remarkably similar. Both central banks raised interest rates by 25 bps last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.