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Forex - NZD/USD weekly outlook: November 24 - 28

Published 11/23/2014, 09:52 AM
Updated 11/23/2014, 09:52 AM
NZD/USD ends the week down 0.3% despite Friday's gains

NZD/USD ends the week down 0.3% despite Friday's gains

Investing.com - The New Zealand dollar moved higher against its U.S. counterpart on Friday, as a surprise rate cut in China and hopes that the European Central Bank will introduce additional stimulus fuelled optimism over the global economy.

NZD/USD hit a daily high of 0.7946 on Friday, before subsequently consolidating at 0.7882 by close of trade on Friday, up 0.16% for the day.

The pair is likely to find support at 0.7806, the low from November 20, and resistance at 0.7973, the high from November 18.

The kiwi was boosted by news that the People's Bank of China cut its benchmark one-year deposit rate by 25 basis points to 2.75% and trimmed its one-year lending rate by 40 basis points to 5.6%.

The move came in response to recent signs of a slowdown in the world’s second-largest economy.

China is New Zealand's second-largest trader partner.

Meanwhile, European Central Bank President Mario Draghi reiterated on Friday that the central bank is ready to expand its stimulus program to raise inflation and inflation expectations as quickly as possible.

Draghi also warned about weak growth in the euro zone, saying that no improvements are expected in the coming months.

The ECB's current stimulus program includes purchases of asset-backed securities and covered bonds, though markets are keeping a close eye out for plans to announce purchases of government debt, a stimulus tool known as quantitative easing.

Despite Friday's upbeat performance, NZD/USD still lost 0.3% on the week amid indications a strengthening U.S. economic recovery will force the Federal Reserve to start raising interest rates sooner and faster than previously thought.

In the week ahead, the U.S. is to release a string of economic reports on Wednesday ahead of Thursday’s Thanksgiving holiday, including data on unemployment claims and durable goods orders.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday, as there are no relevant events on this day.

Tuesday, November 25

New Zealand is to release data on inflation expectations.

The U.S. is to release revised data on third quarter gross domestic product and a report on consumer confidence.

Wednesday, November 26

The U.S. is to release a flurry of data ahead of Thursday’s holiday, including reports on durable goods orders, unemployment claims, personal income and spending, as well as reports on new and pending home sales and revised data on consumer sentiment.

Thursday, November 27

New Zealand is to publish a report on building consents.

Markets in the U.S. are to remain closed for the Thanksgiving Holiday.

Friday, November 28

New Zealand is to publish a private sector report on business confidence.

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