NZD/USD retreats to 0.5700 as RBNZ hawks step back

• NZD/USD pares intraday gains, stays mildly bid amid softer USD.
• RBNZ’s Conway challenges hawkish bias ahead of November’s monetary policy meeting.
• Market sentiment dwindles amid mixed concerns surrounding China, light calendar.
• Risk catalysts could entertain buyers as DXY traces yields.

NZD/USD eases from intraday high, around 0.5710 heading into Tuesday’s European session, as the Kiwi pair buyers trace cautious comments from the Reserve Bank of New Zealand (RBNZ) official. Also challenging the quote’s upside momentum could be the mixed concerns surrounding China, the world’s biggest commodity user and an important customer of New Zealand.

RBNZ's Chief Economist Paul Conway stated that, per Reuters, the era of helpful tradeable inflation may have peaked. The policymaker also adds, “As interest rates have risen, there are early indications that the economy is cooling.”

The comments raise doubts about the RBNZ’s future cash rate hikes even as the central bank is up for announcing a 75 bps rate lift during its monetary policy decision in late November.

The same is the case with the US dollar that witnessed a slightly cautious Fedspeak before the pre-Fed blackout period and hence trace the softer Treasury yields to consolidate the latest gains. It should be noted that the softer US PMIs also weighed on the greenback.

That said, the US Dollar Index (DXY) remains on the back foot around 111.85, taking rounds to intraday low while struggling to extend the week-start gains amid downbeat Treasury bond yields and cautious optimism in the markets.

Against this backdrop, the US 10-year Treasury yields remain pressured around 4.21%, down two basis points (bps) while the US stock futures and stocks in the Asia-Pacific region are mildly bid.

Moving on, an absence of major data/events could test the NZD/USD buyers but the second-tier US Housing data and Consumer Confidence may entertain short-term traders ahead of Thursday’s US Gross Domestic Product for the third quarter (Q3).

Technical analysis

Given the bullish MACD signals and the firmer RSI (14), not overbought, the NZD/USD buyers are all set to cross the immediate hurdle, namely a two-month-old resistance line surrounding the mid-0.5700s. Meanwhile, pullback moves remain elusive unless the quote stays beyond the aforementioned DMA confluence of 0.5660-65.