NZD/USD bears hit four-month lows at  0.5800 ahead of Fed Powell's speech

• New Zealand Dollar extends losses to 0.5800 on track to a 2% weekly depreciation.
• The risk-averse sentiment ahead of Powell's speech is underpinning the US Dollar.
• USD/JPY remains on the back foot since the RBNZ's "dovish cut" earlier in the week.

The New Zealand Dollar extends losses for the fifth consecutive day against a firmer US Dollar, with investors reluctant to take risks ahead of Fed Powell's speech at Jackson Hole. The pair has reached the 0.5800 level for the first time since mid-April, on track for a 2% weekly sell-off.

The US Dollar is outperforming its peers on Friday with all eyes on Fed Powell, who is expected to give further hints about the central bank´s next monetary policy steps. With the market pricing in a 75% chance of a rate cut in September, the US Dollar might be particularly sensitive to hawkish comments from Powell.

A divided Fed committee is failing to give any insight into Powell's speech today. On Thursday, Fed officials Mammack and Smidt represented the hawkish party, downplaying risks of an economic downturn and warning about tariffs' inflationary risks. At the same time, Collins showed openness to cut rates next month to support a softening labour market.

On the other hand, the Kiwi has been on the back foot since the Reserve Bank of New Zealand cut its Official Cash Rate (OCR) by 25 basis points to 3%, as widely expected, with two policymakers voting for a half-point rate cut. The voting standings raised hopes of further monetary easing down the road and sent the Kiwi tumbling across the board.