NZD/USD seesaws above 0.6200 on RBNZ’s Orr, Fed’s preferred inflation, Powell in focus

NZD/USD fades the upside momentum as it declines to 0.6215 after the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr sounds cautious during his speech at the Jackson Hole on early Friday morning in Asia. Also exerting downside pressure on the Kiwi pair are the latest geopolitical headlines, as well as a cautious mood ahead of Fed Chair Jerome Powell’s speech at the aforementioned symposium event.

RBNZ Governor Orr initially mentioned that we think there will be at least another two rate hikes. The policymaker also said, “Our core view is we won't see a technical recession.” However, his comments like, “Central banks may need to push towards zero growth,” seemed to have weighed on the NZD/USD prices.

Also read: RBNZ Orr: At least another couple of rate hikes to come

Additionally favoring the NZD/USD sellers are the geopolitical headlines surrounding China, the US and Iran. The US has suspended 26 Chinese carrier flights in response to China's action, per Reuters. On the other hand, a letter got viral quoting US President Joe Biden as saying, “The US struck Iran-backed forces in Syria in order to safeguard American civilians both at home and abroad.”

It should be noted that China’s heavy stimulus and mildly firmer US data, as well as Fedspeak, favored the NZD/USD buyers previously. China’s nearly one trillion yuan worth of stimulus and a holistic approach by the domestic institutions to safeguard the world’s second-largest economy renewed market optimism earlier.

That said, New Zealand’s ANZ Consumer Confidence for August rose to 85.4 versus 81.9 but failed to impress the pair buyers. As per the US data, the second estimate of the US Gross Domestic Product (GDP) Annualized improved to -0.6% in the second quarter (Q2) versus -0.9% flash estimations and -0.8% market forecasts. Further, US Initial Jobless Claims dropped to the lowest levels in seven weeks, to 243K for the week ended on August 19 versus 253K expected and a revised down prior of 245K.

Moving on, Kansas City Fed President Esther George said on Thursday, "For the near-term thinking about higher interest rates seems reasonable to me." The policymaker also mentioned that (it’s) too soon to say what to expect in September (as) more key data coming. Philadelphia Fed President Patrick Harker was on the same line while he noted, per Reuters, that he wants to see the next inflation reading before deciding on the September rate decision but added that a 50 basis points rate hike would still be a substantial move. Also, Atlanta Fed President Raphael Bostic said to the Wall Street Journal (WSJ) that “at this point, I'd toss a coin between 50 bps and 75 bps,” adding that “if data remains strong and inflation doesn't soften, it may make a case for another 75 bps.

Against this backdrop, Wall Street marked the biggest daily jump in a week while the US 10-year Treasury yields dropped back to 3.03%, after rising to 3.10% the previous day.

Moving on, the US Core Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred inflation gauge, may entertain the traders. Forecasts suggest that the YoY print is to ease to 4.7% from 4.8% while the monthly figures may drop to 0.3% while 0.6% prior. However, more important will be Fed Chair Powell’s speech at the Jackson Hole.

Also read: Jackson Hole Symposium Preview: Will Powell power dollar bulls?

Technical analysis

NZD/USD pulls back from a 50-DMA level surrounding 0.6235 but the bears remain cautious until witnessing a clear break of the 0.6150 horizontal support.