Forex - NZD/USD weekly outlook: March 2 - 6

Investing.com - The New Zealand dollar inched higher against its U.S. counterpart on Friday, as traders digested the latest spate of U.S. economic data in their quest to gauge the timing of a Federal Reserve rate hike.

NZD/USD hit 0.7612 on Thursday, the pair's highest since January 21, before subsequently consolidating at 0.7568 by close of trade on Friday, up 0.48% for the day and 0.56% higher for the week.

Data on Friday showed that the U.S. economy grew 2.2% in the fourth quarter, down from an initial estimate of 2.6% but above expectations for 2.1%.

Other reports showed that U.S. pending home sales rose to a one-and-a-half year high in January and consumer sentiment remained strong last month.

However, the Chicago purchasing managers' index fell sharply to hit a five-and-a-half year low in February.

The data painted a mixed picture of the strength of the country's economic recovery, prompting investors to scale back expectations for a mid-year rate hike.

Earlier in the week, Federal Reserve Chair Janet Yellen said that it was “unlikely” that economic conditions would warrant an interest rate increase for “at least the next couple of FOMC meetings”.

In the week ahead, investors will be turning their attention to Friday’s U.S. nonfarm payrolls report for further indications on the strength of the recovery in the labor market.

Meanwhile, in China, official data released over the weekend showed that activity in the country's factory sector contracted for a second straight month in February.

China's manufacturing purchasing managers' index released Sunday rose to 49.9 in February, just above expectations for a reading of 49.7 and up slightly from a two-year low of 49.8 in January.

On Saturday, the People's Bank of China cut its benchmark interest rate by a quarter percentage point to 5.35%.

It was the second rate cut in less than four months, indicating that Beijing is becoming more aggressive in supporting the economy as its momentum slows and deflation risks rise.

The Asian nation is New Zealand's second largest trade partner.

Investing.com has compiled a list of significant events likely to affect the markets in the week ahead.

Monday, March 2

China is to publish the revised reading of the HSBC manufacturing index.

In the U.S., the Institute of Supply Management is to report on manufacturing activity.

Tuesday, March 3

The Reserve Bank of Australia is to announce its benchmark interest rate and publish its rate statement.

Wednesday, March 4

China is to publish the HSBC services index.

The U.S. is to release the ADP non-farm payrolls report, while looks at private sector jobs growth. Later in the day, the ISM is to report on services sector activity.

Thursday, March 5

The European Central Bank is also to announce its monetary policy decision. The rate announcement will be followed by a post-policy meeting press conference with President Mario Draghi.

The U.S. is to release the weekly report on initial jobless claims and data on factory orders.

Friday, March 6

The U.S. is to round up the week with the closely watched government report on nonfarm payrolls, the unemployment rate and average earnings.