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Before The Jackson Hole Symposium, NZD/USD Corrects Towards 0.5950
The NZD/USD strengthened on the back of disappointing US PMI data. Investors await Fed Chair Powell's speech in search of additional monetary policy indicators. Overnight, US bond yields fell by nearly 3%.
During Thursday's Asian session, NZD/USD trades around 0.5960. NZD/USD gained traction after the Greenback underwent a corrective move in response to Wednesday's disappointing preliminary PMI data from the United States (US).
In addition, as a result of weaker US economic data, US Treasury yields fell significantly, exerting downward pressure on the US Dollar (USD). Overnight, 10-year US bond yields fell to 4.19 percent, a decrease of nearly 3.00 percent. However, market participants will also intently monitor the Jackson Hole annual symposium, which begins on Thursday, particularly Fed Chair Jerome Powell's Friday speech.
In August, the S&P Global Manufacturing PMI reported a lower reading of 47 than expected 49.3, compared to the previous figure of 49. The S&P Global Services PMI for August decreased to 51 from 52.3 previously, falling short of the anticipated 52.2. The disappointing US PMI indicated weakened economic activity, increasing market expectations that the US Federal Reserve (Fed) will not raise interest rates at its September meeting. This provides support for the NZD/USD exchange rate.
The weakest day for the US Dollar Index (DXY) since early August. At the time of writing, DXY, which gauges the performance of the U.S. dollar against the six major currencies, was trading around 103.40. The retracement of the US Dollar (USD) is caused by weaker-than-expected US PMI data, which instills a sense of caution in the market as it seeks additional signals regarding the Fed's monetary policy tightening.
The release of Durable Goods Orders for July from the United States (US) and Initial Jobless Claims on August 18 is anticipated by investors. These datasets may shed light on the state of the US economy, providing fresh impetus for conducting trades in the NZD/USD currency pair.
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