Investing.com - The New Zealand dollar tumbled to a four-month low against its U.S. counterpart on Friday, as the broad based selloff in emerging markets spurred safe haven demand.
NZD/USD fell to 0.8063 on Friday, the pair’s lowest since September 11, before subsequently consolidating at 0.8088 by close of trade, down 0.97% for the day and 1.53% lower for the week.
The pair is likely to find support at 0.8063, Friday’s low and resistance at 0.8164, the high from November 29.
The New Zealand dollar came under pressure as the selloff in emerging markets prompted investors to stage a broad retreat from riskier assets. The Turkish lira and the South African rand tumbled after surprise rate hikes did little to shore up the currencies.
The New Zealand dollar fell sharply against the yen on Friday, with NZD/JPY plunging 1.6% to hit 82.56 at the close.
Emerging markets have been hard hit by a combination of concerns over the impact of cuts to the Federal Reserve’s stimulus program and fears over a possible slowdown in China.
On Wednesday, the Fed said it would scale back its monthly asset purchase program by another USD10 billion to USD65 billion a month, citing improvements in the labor market.
The kiwi was also lower after the Reserve Bank of New Zealand left rates on hold earlier in the week, disappointing some market expectations for a rate hike.
The RBNZ left the cash rate at a record low of 2.5% on Thursday, saying the country’s "economic expansion has considerable momentum" and added that a return of interest rates to more normal levels can be expected "soon."
Data from the Commodities Futures Trading Commission released Friday showed that speculators increased their bullish bets on the New Zealand dollar in the week ending January 28.
Net longs totaled 9,685 contracts as of last week, up 11% from net longs of 8,556 contracts in the previous week.
In the week ahead, investors will be keenly anticipating Friday’s U.S. nonfarm payrolls report for January after December’s report showed that the economy added far fewer jobs than expected.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, February 3
The U.S. Institute of Supply Management is to produce data on manufacturing activity, a leading economic indicator.
Tuesday, February 4
The U.S. is to produce data on factory orders, a leading indicator of production.
New Zealand is to publish data on the change in the number of people employed and the unemployment rate.
Wednesday, February 5
The U.S. is to release the ADP report on private sector job creation, which leads the government’s nonfarm payrolls report by two days. Meanwhile, the ISM is to publish a report service sector activity.
Markets in New Zealand are to remain closed for a national holiday.
Thursday, February 6
The U.S. is to publish the weekly report on initial jobless claims as well as data on the trade balance.
Friday, February 7
The U.S. is to round up the week with the closely watched government data on nonfarm payrolls and the unemployment rate.