NZD/USD corrects toward 0.5950 ahead of Jackson Hole Symposium

• NZD/USD gained momentum on the back of downbeat US PMI data.
• Investors await Fed Chair Powell’s speech, seeking further cues on the monetary policy.
• US bond yields dropped by almost 3.00% overnight.

NZD/USD trades around 0.5960 during the Asian session on Thursday. NZD/USD gained momentum after the Greenback was undergoing a corrective move due to downbeat preliminary PMI data released from the United States (US) on Wednesday.

Additionally, the US Treasury yields fell sharply on weaker US economic data, exerting downward pressure on the US Dollar (USD). The 10-year US bond yields dropped to 4.19%, down by almost 3.00% overnight. However, market participants will also closely watch the upcoming Jackson Hole annual symposium, which starts on Thursday, notably Fed Chair Jerome Powell’s speech on Friday.

As said, S&P Global Manufacturing PMI in August reported a lower reading of 47 than the expected 49.3, from the previous 49 figure. The S&P Global Services PMI for August signaled a weakening, with a drop to 51 from the prior 52.3, falling short of the expected 52.2. The downbeat US PMI signaled weaker economic activity, raising market expectations of no interest rate hike in the September meeting by the US Federal Reserve (Fed). This is offering support to the NZD/USD pair.

The US Dollar Index (DXY) faced the weakest day since early August. DXY, which measures the performance of the Greenback against the six major currencies, trading at around 103.40 at the time of writing. The pullback of the US Dollar (USD) occurs due to weaker-than-anticipated US PMI data, leading to a sense of caution in the market as it seeks further signals about the monetary policy tightening by the Fed.

Investors await the upcoming releases of Durable Goods Orders for July from the United States (US) along with Initial Jobless Claims (Aug 18). These datasets could provide insights into the state of the economy in the US, offering fresh impetus for placing trades in the NZD/USD pair.