Asian markets mixed as Nvidia boost offsets Jackson Hole caution

The New Zealand Dollar (NZD) gained strength, surpassing the 0.5950 mark during Asian trading hours on Friday. This upward movement was driven by a hawkish statement from the Reserve Bank of New Zealand (RBNZ). However, caution may prevail later in the day as Federal Reserve Chair Kevin Warsh delivers a speech at the Jackson Hole Symposium.

New Zealand's Consumer Price Index (CPI) inflation data for the second quarter was higher than expected, which supported the belief of a 25-basis-point increase in the RBNZ's official cash rate (OCR) by September. This hike is considered highly probable, with 94% of market pricing suggesting so. The RBNZ is projected to tighten further, aiming for an OCR of around 3.5% by May 2027, although BNZ's projections indicate a potential OCR of 4.0% in the same month.

Market participants will be watching Warsh's speech at the Jackson Hole Symposium, as his comments could offer more insight into the US economy and interest rates. A hawkish remark from Warsh might support the US Greenback and pose challenges for the NZD pair in the short term. MUFG analysts mention that high leveraged fund short positioning in the NZD could be due to 'skepticism over the RBNZ's ability to achieve 100bps of tightening over the next year'.

They also point to a rise in the New Zealand unemployment rate, despite strong employment growth, indicating a softer labor market backdrop. This could explain why investors are hesitant to fully price in the RBNZ's projected tightening. The NZD/USD pair is showing a bullish near-term bias as it remains above its 100-day simple moving average (SMA) and the Bollinger Bands' middle line.

The Relative Strength Index (14) at 63 suggests overbought conditions, but the potential for upside momentum may be weakening as the price nears the upper end of its recent volatility range.