NZD/USD fades bounce off six-week low near 0.6150 ahead of US Consumer Confidence, NFP

• NZD/USD struggles to extend corrective pullback from 1.5-month low, steadies of late.
• Recession woes, hawkish central bankers underpin bearish bias.
• Market’s consolidation amid a light calendar triggered the Kiwi pair’s corrective bounce.
• US CB Consumer Confidence for August, Fedspeak will be important for intraday directions.

NZD/USD treads water around 0.6150, after bouncing off a 1.5-month low and retreating from 0.6168, as traders await fresh clues during Tuesday’s Asian session. Alike other major currencies, the Kiwi also cheered the US dollar’s pullback from nearly a two-decade high amid Monday’s volatile session. The recovery moves, however, remain elusive amid fears of economic slowdown and hawkish central bankers.

Markets began the US Nonfarm Payrolls (NFP) week on a sour note and underpinned the US dollar as global central bankers raised economic slowdown fears but refrained from stepping back on the rate hike trajectory. Among them, the US Federal Reserve (Fed) Chairman Jerome Powell gained major attention and propelled the hawkish Fed bets, which in turn fuelled the US Dollar Index (DXY) to a fresh high in late 2002.

However, the corrective pullback in prices and a light calendar joined firmer US data to help portray a consolidation in the US dollar’s latest gains and favored the NZD/USD prices to recover. Even so, economic fears and nearly 73% chances of a 75 bps Fed rate hike in September, per CME’s FedWatch Tool, exert downside pressure on the quote of late.

That said, Dallas Fed Manufacturing Business Index improved to -12.9 versus -20.2 expected and -22.6 prior.

It should be noted that Minneapolis Federal Reserve Bank President Neel Kashkari stated that people now understand how serious we are about getting inflation back to 2%.

On a different page, China’s economic slowdown fears escalate amid the fresh Sino-American tussles over the Taiwan Strait and doubts about the capacity of stimulus to help trigger the economic recovery also weighed on the NZD/USD prices.

Against this backdrop, equities remain downbeat but the US 10-year Treasury yields grew nearly eight basis points (bps) to 3.11% at the latest.

Moving on, a light calendar at home emphasizes US Consumer Confidence for August and comments from Fed speakers as the main catalysts to watch for fresh impulse.

Technical analysis

A 12-day-old resistance line around 0.6185 restricts immediate NZD/USD upside ahead of the key 50-DMA hurdle surrounding 0.6230. That said, the 0.6100 round figure appears to restrict the short-term downside of the pair.