- 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
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.
Recommended content
Editors’ Picks
EUR/USD extends recovery beyond 1.0400 amid Wall Street's turnaround
EUR/USD extends its recovery beyond 1.0400, helped by the better performance of Wall Street and softer-than-anticipated United States PCE inflation. Profit-taking ahead of the winter holidays also takes its toll.
GBP/USD nears 1.2600 on renewed USD weakness
GBP/USD extends its rebound from multi-month lows and approaches 1.2600. The US Dollar stays on the back foot after softer-than-expected PCE inflation data, helping the pair edge higher. Nevertheless, GBP/USD remains on track to end the week in negative territory.
Gold rises above $2,620 as US yields edge lower
Gold extends its daily rebound and trades above $2,620 on Friday. The benchmark 10-year US Treasury bond yield declines toward 4.5% following the PCE inflation data for November, helping XAU/USD stretch higher in the American session.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.