NZD/USD weighed by a risk-off start to the week

• NZD/USD remains pressured as risk-off markets take hold. 
• US stocks end lower in anticipation of higher rates. 

NZD/USD has been on the backfoot and will enter the roll-over close to fresh six-day lows near 0.6150. The bears engaged after the People's Bank of China trimmed lending rates was taken as only a minor positive due to the deepening troubles in the economy. 

 After a monthly meeting, the PBOC lowered the one-year loan prime rate by 5 basis points to 3.65% from 3.7%, while the five-year rate was cut by 15 basis points to 4.3% from 4.45%, reducing the cost of payments on existing loans. Consequently, the yuan cropped and the commodities complex was dragged lower, taking down the antipodeans. 

Meanwhile, ''inflation remains at front of mind, and US markets seem to be warming to the idea that it could be harder to tame this time around given energy market woes, dents in supply chains and tight labour markets,'' analysts at ANZ Bank argued. '

'This is, in turn, driving a shift in bond markets, which have of late been content to assume a slowdown might miraculously drive inflation lower; and that, in turn, is driving the USD up (the DXY is only 25bps from July’s 20-year high).''

The US two-year Treasury yield has risen by 3% to 3.346% while the 10-year yield climbed 1.68% to 3.04%, implying the yield curve between the two maturities remains inverted, a bearish signal if sustained. This is fuelling a bid on the greenback. Against a basket of currencies, the US dollar was 0.85% higher at 109.09 DXY, not far from the two-decade high of 109.29 touched in mid-July.

US stocks started the week in negative territory in anticipation of higher rates which has also weighed on the antipodeans. The Dow Jones Industrial Average dropped 2% to 33,063.61 while the S&P 500 was also down 2% to 4,137.99, making Monday's session their worst day since June. The Nasdaq Composite was 2.6% lower at 12,381.57. 

Ahead of Jackson Hole, ''financial conditions have continued to ease,'' analysts at TD Securities said. ''Powell's speech will likely aim to reinforce the message that multiple, sizable hikes are still in the pipeline, and easing should not be expected to be on the horizon anytime soon.''