Investing.com - The New Zealand dollar rose to a 16-week high against its U.S. counterpart on Friday, before trimming gains to end little changed, as investors continued to speculate over the timing of the Federal Reserve’s widely expected reduction in monthly bond purchases.
NZD/USD hit 0.8170 on Friday, the pair’s highest since May 23; the pair subsequently consolidated at 0.8134 by close of trade on Friday, down 0.05% for the day but still 1.57% higher for the week.
The pair is likely to find support at 0.8036, the low from September 11 and resistance at 0.8204, the high from May 22.
The Commerce Department said U.S. retail sales rose 0.2% in in August, undershooting expectations for a 0.4% increase.
A separate report showed that the preliminary reading of the University of Michigan’s consumer sentiment index fell to a five month low of 76.8, from a final reading of 82.1 in August.
The reports came a week after the latest U.S. employment report showed that the economy added slightly fewer jobs than expected in August.
The disappointing data added to uncertainty over whether the Fed will start to unwind its USD85 billion-a-month asset purchase program at its upcoming policy meeting on September 17-18.
Fed Chairman Ben Bernanke has said that the decision to begin tapering will depend on whether economic data is strong enough.
The kiwi was also supported after the Reserve Bank of New Zealand left interest rates unchanged on Thursday and said increases are to be expected next year.
In a widely expected move, the RBNZ held its benchmark interest rate at a record-low 2.50% but added that increases “will likely be required next year” as the economy strengthens and inflation picks up.
In the week ahead, investors will be keenly anticipating the outcome of the Fed’s policy-setting meeting on Wednesday, and a press conference with Fed chief Ben Bernanke will be closely watched.
Meanwhile, New Zealand will release data on second quarter economic growth.
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 16
The U.S. is to publish the Empire state manufacturing index, in addition to data on industrial production and the capacity utilization rate.
Tuesday, September 17
The U.S. is to release data on consumer price inflation, which accounts for a majority of overall inflation.
Wednesday, September 18
The U.S. is to release official data on building permits, a leading indicator of future construction sector activity, as well as data on housing starts.
The Fed is to announce its federal funds rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. Chairman Ben Bernanke is to hold a press conference after the rate announcement.
Thursday, September 19
New Zealand is to publish data on second quarter gross domestic product, the broadest indicator of economic activity and the leading indicator of economic health.
The U.S. is to release the weekly report on initial jobless claims, as well as the Philly Fed manufacturing index and data on existing home sales.