- NZD / USD broke higher to trade at 0.6620 at the time of writing, posting a high of 0.6622 so far from the daily low of 0.6541.
- The US dollar is on the back foot in the Jackson Hole with the DXt below the 93 handle.
Short hedging and improving risk appetite are the catalysts as markets anticipate a lower theme for longer of this week’s Jackson Hole event.
The narrative of reflation and falling real yields will weigh on the greenback in what is expected to be confirmed by Powell tomorrow.
Investors expect the Fed to keep rates low, which could be the nail in the coffin for the DXY already tinkering on the brink of falling into the abyss.
The DXY is already looking to the bottom of the abyss and a breakout of 92.13 could signify the next step in the dollar’s bearish cycle, targeting 90.93.
On the other hand, an upward correction opens the risk to 94.80 before a 38.2% Fib confluence above 96.00,
RBNZ in brief
However, the bird has its own issues ahead as traders turn to domestic OCR and negative rate outlook.
Local factors matter to the NZD and readers will be well aware of our views on the prospects for RBNZ policy and the resulting headwinds for the NZD,
ANZ Bank analysts explain.
But against a backdrop of renewed USD weakness, even that may not be enough and we will experience episodes of strength.
The post-COVID peak is still a hundred above us; if we break over it, new thinking will be needed. The NZD price action will frustrate a lot of people, not just the RBNZ.