Investing.com - The New Zealand dollar tumbled to a seven-month low against its U.S. counterpart on Friday, amid speculation Federal Reserve policy makers could adopt more hawkish language at their meeting next week.
NZD/USD hit 0.8143 on Friday, the pair’s lowest since February 4, before subsequently consolidating at 0.8152 by close of trade on Friday, down 0.38% for the day and 2.11% lower for the week.
The pair is likely to find support at the 0.8100 level and resistance at the 0.8200 level.
The dollar remained well bid after a study by the San Francisco Federal Reserve suggested that investors' expectations for rate hikes lag those of the Fed.
The research published on September 8 underlined expectations that the Fed could signal a rate hike at its policy meeting next week, possibly by omitting mention of its commitment to keep rates low for a "considerable time".
Upbeat U.S. economic data on Friday underlined optimism over the strength of the economy.
In a preliminary report, the University of Michigan said its consumer sentiment index rose to a 14-month high of 84.6 this month, from a reading of 82.5 in August.
The data came after a government report showed that U.S. retail sales rose 0.6% last month, in line with expectations.
Meanwhile, in New Zealand, the Reserve Bank of New Zealand left interest rates unchanged at 3.5% in a widely expected move on September 11.
The central bank also signaled that it will keep interest rates on hold for a longer period of time after lowering inflation forecasts to 1.4% in the 12 months ending March 31, down from the 1.8% forecast in June.
Commenting on the decision, RBNZ Governor Graeme Wheeler said "it is prudent to undertake a period of monitoring and assessment before considering further policy adjustment."
Wheeler also said he expects "a further significant depreciation" in the New Zealand dollar.
Data from the Commodities Futures Trading Commission released Friday showed that speculators decreased their bullish bets on the New Zealand dollar in the week ending September 9.
Net longs totaled 9,522 contracts, down slightly from net longs of 10,172 in the preceding week.
In the week ahead, investors will be focusing on the outcome of Wednesday’s Fed policy meeting. Fed Chair Janet Yellen was to hold a press conference following the meeting.
The central bank was expected to cut its asset purchase program by another $10 billion, which would keep it on track for winding up the program in October, and to start raising interest rates sometime in mid-2015.
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 Friday as there are no relevant events on this day.
Monday, September 15
The U.S. is to release reports on manufacturing activity in the Empire State and industrial production.
Tuesday, September 16
The U.S. is to produce data on producer price inflation.
Wednesday, September 17
New Zealand is to publish data on the current account.
The U.S. is to produce data on consumer prices. Later Wednesday, the Federal Reserve is to announce its federal funds rate and publish its rate statement. Fed Chair Janet Yellen is to hold a press conference following announcement.
Thursday, September 18
New Zealand is to publish data on gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.
The U.S. is to produce a flurry of economic data, including reports on initial jobless claims, building permits, housing starts and manufacturing activity in the Philadelphia region.