- NZD/USD plunges more than 1% on Friday, in a risk-off mood.
- Powell said it would “bring some pain to households and businesses” in achieving the Fed’s 2% goal.
- US inflation readings show signs of peaking while US consumer sentiment improves.
The NZD/USD dropped to fresh weekly lows of 0.8150 on Friday, following hawkish remarks by US Federal Reserve Chair Jerome Powell, reiterating the Fed’s job of restoring price stability towards the bank’s 2% target. Furthermore, he acknowledged that it will “require a sustained period of below-trend growth.” Consequently, sentiment shifted sour, with US equities falling off the cliff.
NZD/USD falls on Powell’s hawkish remarks and upbeat US economic data
In the Asian session, the NZD/USD opened above the 0.6220 figure, fluctuating within the 0.6180-0.6220 range ahead of US economic data releases and Powell’s remarks on Jackson Hole. Nevertheless, once Powell took the stand, the NZD/USD seesawed as volatility increased, sending the major to week’s lows. At the time of writing, the NZD/USD exchanges hands at 0.6148, well below its opening price.
Summarizing Powell’s remarks, he said that reducing inflation will “bring some pain to households and businesses” amidst a period of higher interest rates, softening labor market conditions, and sluggish economic growth. The Fed Chair reiterated that the Fed would “bring inflation back down to our 2% goal,” commenting that the central bank is taking rapid steps to curtail demand, so it better aligns to supply.
Jay Powell welcomed the July inflation figures but quickly added that a “single month improvement falls far short of what the Committee needs to see” regarding the direction of inflation. Powell noted that being around a neutral stance “was not a place to stop or pause,” pushing against the market’s perceptions of a Fed pivot that triggered a 15% rally ons US equities from June’s lows.
Aside from this, the US economic calendar unveiled the University of Michigan Consumer sentiment for August on its final release. American citizens’ sentiment improved to 58.2 vs. 55.2 estimates, while inflation expectations for a one-year horizon fell to 4.8% from 5.2% last month.
Earlier on Friday, the Fed’s favorite inflation gauge, headline, and core Personal Consumption Expenditures (PCE) price Indices for July. Headline PCE rose by 6.3% YoY, higher than the 6.2% estimated, while core PCE, which excludes volatile items, decelerates to 4.6% YoY vs. 4.7% forecast.
NZD/USD Key Technical Levels
|Today last price||0.6148|
|Today Daily Change||-0.0085|
|Today Daily Change %||-1.36|
|Today daily open||0.6233|
|Previous Daily High||0.6252|
|Previous Daily Low||0.6174|
|Previous Weekly High||0.6457|
|Previous Weekly Low||0.6165|
|Previous Monthly High||0.633|
|Previous Monthly Low||0.6061|
|Daily Fibonacci 38.2%||0.6222|
|Daily Fibonacci 61.8%||0.6204|
|Daily Pivot Point S1||0.6188|
|Daily Pivot Point S2||0.6142|
|Daily Pivot Point S3||0.611|
|Daily Pivot Point R1||0.6265|
|Daily Pivot Point R2||0.6298|
|Daily Pivot Point R3||0.6343|
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.