NZD/USD faces barricades around 0.6180 as investors await Jackson Hole

• NZD/USD has sensed selling pressure around 0.6180 on an expectation of hawkish guidance by the Fed.
• Fed could slow down the pace of hiking interest rates to safeguard US economic activities.
• Kiwi investors will focus on PBOC’s interest rate policy and Retail Sales data.

The NZD/USD pair is hovering around 0.6176 at open and is building a base for further downside ahead. The asset displayed a five-day losing streak earlier after printing a fresh two-month high of 0.6469. The major is expected to extend its downside after violating Friday’s low at 0.6165 and will continue the losing spell as the US dollar index (DXY) will hog the limelight ahead of Jackson Hole Symposium.

As per the minutes from the Federal Reserve (Fed)’s July monetary policy, the Fed could slow down the pace of hiking interest rates in order to safeguard the economic activities in the US from the consequences of squeezing liquidity. A decline in the availability of cheap money in the economy will force the credit availing community to stick to ultra-filtered investment opportunities only.

On the kiwi front, a spree of hiking the Official Cash Rate (OCR) by the Reserve Bank of New Zealand (RBNZ) has failed to support the antipodean. The RBNZ elevated the OCR by 50 basis points (bps) fourth time in a row to 3% and is seeing the OCR to 4%. RBNZ Governor Adrian Orr is keeping on escalating the critical rates to fight the ramping inflation. 

This week, the NZ Retail Sales data will be of utmost importance. Earlier, the economic data landed at -0.5%. Price pressures still persist in the kiwi economy and over that a decline in the economic data will put the kiwi dollar on the tenterhooks.

In today’s session, investors will keep an eye on the interest rate decision by the People’s Bank of China (PBOC).  Currently, the one-year Prime Lending Rate (PLR) is at 3.7% while the five-year PLR is at 4.45%. A dovish stance by the PBOC on lending rates will strengthen the kiwi bulls. It is worth noting that NZ is a leading trading partner to China. Therefore, a loose monetary policy by the PBOC will support the antipodean.