Forexpros – The New Zealand dollar rose against its U.S. counterpart on Friday, trimming some of the week’s losses but market sentiment remained under pressure as global growth concerns and lowered expectations for more action by the European Central Bank weighed.
NZD/USD hit 0.8082 on Friday, the pair’s lowest since August 2; the pair subsequently consolidated at 0.8131 by close of trade on Friday, shedding 0.67% over the week.
The pair is likely to find support at 0.8066, the low of August 1 and resistance at 0.8197, the high of August 3.
Investors remained cautious after data on Friday showed that Chinese exports grew just 1.0% on the year in July, down from the 11.3% gain seen in June, while imports rose 4.7% year-over-year, down from 6.3% in June.
Sentiment also remained under pressure after the European Central Bank said in its monthly bulletin on Thursday that the economic outlook for the euro zone faced a number of downside risks, with financial market tensions and their potential impact on growth posing the key threats.
The ECB revised down its forecast for economic growth to 0.6% in 2013, down from 1% previously and forecast a 0.3% contraction in growth this year, slightly worse than its previous forecast of for a 0.2% contraction.
In addition, optimism that the ECB will soon move to cut high Spanish and Italian borrowing costs faded as investors waited for more details of the bank’s proposed bond buying program to emerge.
Meanwhile, the greenback found support after robust employment and trade data eased concerns over the U.S. economic outlook.
The Department of Labor said that the number of people who filed for unemployment assistance in the U.S. declined to 361,000 last week, from an upwardly revised 367,000 in the previous week, against expectations for an increase to 370,000.
A separate report showed that the U.S. trade deficit dropped to USD42.9 billion in June, its lowest level in two-and-a-half years.
Also Thursday, official data showed that employment change in New Zealand fell unexpectedly in the second quarter, ticking down 0.1% after a 0.4% rise the previous quarter.
Analysts had expected employment change to rise 0.3% in the second quarter.
The report also showed that New Zealand’s unemployment rate rose to 6.8% in the second quarter from 6.7% in the previous quarter, disappointing expectations for a decline to 6.5%.
In the week ahead, market participants will be awaiting data on second quarter growth from the euro zone and looking ahead to central bank minutes from the Bank of Japan and the Bank of England, amid ongoing speculation that world central banks may take steps to shore up economic growth.
Investors will also watching U.S. data on retail sales, inflation and housing in an attempt to assess the strength of the U.S. economic recovery.
Ahead of the coming week, Forexpros 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 that day.
Tuesday, August 14
New Zealand is to publish official data on retail sales, the primary gauge of consumer spending.
Later Tuesday, the U.S. is to publish official data on retail sales and producer price inflation, followed by data on business inventories.
Wednesday, August 15
The U.S. is to release official data on consumer price inflation, as well as a report on manufacturing activity in the New York area and government data on net long term securities transactions. The Federal Reserve is also to produce data on the capacity utilization rate and industrial production, followed by a government report on crude oil inventories.
Thursday, August 16
The U.S. is to publish official data on building permits, a key gauge of future construction activity, as well as weekly government data on unemployment claims. The country is also to release official data on housing starts and a report on manufacturing activity in the Philadelphia area.
Friday, August 17
New Zealand is to produce official data on producer price inflation input, a leading indicator of consumer inflation.
The U.S. is to round up the week with a preliminary report by the University of Michigan on consumer sentiment and inflation expectations.
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