NZD/USD extends downside to near 0.5800 as traders brace for Powell’s Jackson Hole remarks

• NZD/USD trades in negative territory around 0.5805 in Friday’s early European session.

• Dovish rate cut from the RBNZ undermines the New Zealand Dollar.

• The attention will shift to the Fed’s annual Jackson Hole symposium later on Friday. 

The NZD/USD pair remains under selling pressure near 0.5805 during the early European trading hours on Friday. The Reserve Bank of New Zealand’s (RBNZ) dovish tone exerts some selling pressure on the New Zealand Dollar (NZD) against the Greenback. All eyes will be on the speech from Federal Reserve (Fed) Chair Jerome Powell at the Jackson Hole symposium later on Friday. 

As widely expected, the RBNZ has cut the Official Cash Rate (OCR) by 25 basis points (bps) to 3.0% at its August meeting on Wednesday. The New Zealand central bank signalled further reductions in the coming months as policymakers warned of domestic and global headwinds to growth. 

It also projected a new rate track that suggests an OCR of 2.5% by March 2026, implying another two 25 bps reductions to come in this cycle. Markets are now pricing in nearly a 50% possibility of a move in October and over a 100% chance for November, according to Reuters. 

Investors reassess rate cut wagers ahead of the highly anticipated speech from the Fed’s Powell for clues on the policy outlook. A dovish tilt from Powell could weigh on the Greenback and cap the downside for the NZD/USD pair. “Ahead of Chair Powell’s Jackson Hole remarks, markets appear overly hopeful for a dovish shift,” said Rajeev De Mello, chief investment officer at Gama Asset Management.