Fed-speak: Barkin & Bostic lean dovish, mild downside bias for dollar. S&P500 attempting to achieve longest winning streak (9 days) since 2004. NZD meets resistance above 0.5950

By Stuart Talman, XE currency strategist

The US dollar has drifted lower through Thursday as the market receives additional insights from more Fed officials, Richmond Fed President Thomas Barkin and Atlanta Fed President Raphael Bostic both participating in a fireside chat.

Following three-days of selling the New Zealand dollar found support near 59 US cents, rebounding around a third-of-a-percent to claim top spot on the G10 leaderboard. Net intraday moves amongst the majors have once again been condensed as currencies await their next major directional catalyst.

Tuesday's US CPI report for October is that obvious catalyst.

Kiwi dollar bulls were unable to drive NZDUSD beyond 60 US cents, Friday and Monday's highs marked a pip or so north of the key psychological mark. Likewise, sellers appear unwilling to explore territory south of 0.59, given US treasury yields continue to extend lower following last week's washout.

The constant flow of Fed-speak through this week has failed to explicitly push back against the market's dovish interpretation of the 02 November FOMC meeting, nor flag that financial conditions have significantly loosened in quick time - the yield on the benchmark 10-year note crunched from north of 5.00% through 4.50% whilst the S&P500 extends its bets winning streak since 2004.

When asked during his FOMC presser if tighter financial conditions have done the Fed's work (replacing the need for additional rate hikes), Fed Chair Powell responded that these tighter conditions must remain in place for an extended period to have the desired effect in cooling the US economy.

Numerous Fed officials speaking this week have shied away from acknowledging the pronounced pullback in yields and the rapid ascent in the three major US equity markets……this may change when Powell participates in a panel discussion at an IMF hosted event, later in the day, Thursday (US time).

Bostic, a 2024 FOMC voter and noted dove, acknowledged the US economy had yet to feel the full effects of the Fed's 525bps of cumulative tightening, confirming that he believed the target rate is sufficiently restrictive. Barkin, also a 2024 vote and regarded as more hawkish leaning, commented that despite strong activity readings for 3Q, the US economy is not as strong as the headline numbers suggest.

Should Powell echo these views, the dollar likely continues to trade with a mild downside bias heading into the week's final sessions.

Rounding out the week, the data releases of note include the RBA Monetary Policy Statement which will include the latest forecasts, UK GDP and Michigan Consumer Sentiment.

We suspect Powell may be a little more hawkish than his FOMC colleagues and therefore back the Kiwi closing closer to 59 US cents rather than 0.6000.

Stuart Talman is Director of Sales at XE. You can contact him here.