- NZD/USD is lower on a move up in the US dollar.
- Traders are getting set for key central bank events in the coming days.
NZD/USD was down 50% on the day by the time of the closing bell on Wall Street.
NZD/USD fell from a high of 0.7047 to a low of 0.6995 as the greenback perked up following the Producer Price Index which posted its largest annual increase in more than a decade in the 12 months through July.
The producer price index (PPI) for final demand increased 1.0% last month after rising 1.0% in June.
In the 12 months through July, the PPI jumped 7.8%, a record high since the measure was introduced just over a decade ago which has served to keep the US dollar elevated in the count down to the Jackson Hole event:
DXY daily chart
The US dollar, however, could be on a collision course with the recent resistance that was marked up following the US Consumer Price Index data that underwhelmed the market.
Should the USD bulls retire in the run-up to the 26-28 Jackson Hole event where the Fed's chairman Jerome Powell will headline, then this could offer some relief to the kiwi for the meanwhile.
With that being said, there may not be too much activity from the currency as traders get set for volatility around the Reserve Bank of New Zealand next week.
''We’re likely seeing pre-positioning for next week’s RBNZ MPS, which will be messy no matter the result given that the market is split 80/20 between a 25bp and a 50bp hike. Volatility is thus likely,'' analysts at ANZ Bank said.
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