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Forex - NZD/USD weekly outlook: May 19 - 23

Published 05/18/2014, 09:07 AM
NZD/USD ends the week with a gain of 0.25%
NZD/USD
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Investing.com - The New Zealand dollar fell from the previous session’s one-week high against its U.S. counterpart on Friday, amid indications that the U.S. economy is shaking off the effect of a weather-related slowdown over the winter.

NZD/USD hit 0.8694 on Thursday, the pair’s highest since May 7, before subsequently consolidating at 0.8634 by close of trade, down 0.12% for the day but still 0.25% higher for the week.

The pair is likely to find support at 0.8607, the low from May 13 and resistance at 0.8694, the high from May 15.

The Commerce Department reported Friday that U.S. housing starts rose 13.2% last month, the largest increase in five months and following a 2.0% increase in March.

The upbeat housing data came one day after a report from the U.S. Department of Labor showed that the number of people who filed for unemployment assistance in the U.S. last week fell to a six-year low of 297,000.

The robust data underlined the view that the U.S. economy was regaining traction after being slowed by unusually cold temperatures during the winter months.

Meanwhile, in its annual budget release published Thursday, New Zealand's Treasury said the operating surplus will be NZ$372 million in the year through June 2015, up from a previously forecast NZ$86 million.

The Treasury also forecast the nation's jobless rate will decline to 4.4% in 2018 from a projected 5.4% next fiscal year.

The report came after Reserve Bank of New Zealand Chairman Graeme Wheeler said last week that the speed and extent of further interest rate increases will depend on economic performance and how much the nation’s strong currency weighs on inflation.

The central bank has already raised its benchmark interest rate twice this year to 3%, after keeping at a record low 2.5% to support the economy.

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 May 13.

Net longs totaled 19,340 contracts as of last week, compared to net longs of 20,693 contracts in the previous week.

In the week ahead, investors will be looking to the minutes from the Federal Reserve's latest monetary policy meeting, due for release on Wednesday, for insight on the central bank's view of the economy.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, May 19

New Zealand is to publish data on producer price inflation.

Tuesday, May 20

Federal Reserve Bank of Philadelphia Charles Plosser and Federal Reserve Bank of New York President William Dudley are to speak.

Wednesday, May 21

Fed Chair Janet Yellen is to speak at an event in New York. Later Wednesday, the Fed is to publish the minutes of its latest meeting.

Thursday, May 22

New Zealand is to produce data on inflation expectations.

China is to publish the preliminary reading of the HSCB manufacturing index. The Asian nation is the New Zealand’s second-largest trade partner.

The U.S. is to release its weekly report on initial jobless claims and private sector data on existing home sales.

Friday, May 23

The U.S. is to round up the week with data on new homes sales.

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