Forexpros – The New Zealand dollar ended the week sharply lower against its U.S. counterpart on Friday, as sustained worries over debt contagion in the euro zone dampened demand for risk-related currencies.
NZD/USD hit 0.7551 on Friday, the pair’s lowest since October 4; the pair subsequently consolidated at 0.7561 by close of trade on Friday, plunging 4.60% over the week.
The pair is likely to find support at 0.7467, the low of October 4 and a six-month low and resistance at 0.7722, the high of November 16.
The kiwi came under pressure after briefly rallying against the U.S. dollar on Friday, amid ongoing concerns over the handling of the debt crisis in the euro zone.
European Central Bank President Mario Draghi pushed back against politicians and investors asking him to do more to end the sovereign debt crisis, expressing impatience with leader’s failure to act.
Meanwhile, Italy’s newly-appointed Prime Minister Mario Monti won a parliamentary confidence vote, giving him a mandate to begin drafting his agenda, which includes broader structural reforms.
Following the vote, Italian bond yields found support, falling back below the 7% threshold widely seen as unsustainable for borrowing in the long term. Spanish bond yields also eased after rising close to 7% at a government bond auction earlier in the week, as the ECB purchased Italian and Spanish government debt.
Earlier Friday, official data showed that New Zealand’s producer price inflation input rose 0.6% in the third quarter, in line with expectations, after a 0.9% increase the previous quarter.
The kiwi fell sharply against the greenback on Thursday, shrugging off positive U.S. data on housing and employment. Government data showed that U.S. building permits rose to the highest level since March 2010 in October, while U.S. housing starts were largely unchanged.
A separate report revealed that the number of people who filed for unemployment assistance in the U.S. in the week ending November 11 fell by 5,000 to a seven-month low of 388,000.
In the week ahead, investors will be keeping a close eye on developments within the euro zone. Meanwhile, U.S. data on third quarter growth and durable goods orders will be closely watched, as well as New Zealand data on inflation expectations and trade balance.
Ahead of the coming week, Forex Pros 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, November 21
The U.S. is to release industry data on existing home sales.
Tuesday, November 22
New Zealand is to release official data on inflation expectations, an important indicator of economic growth.
Later Tuesday, the U.S. is to release preliminary data on gross domestic product, the broadest measure of economic activity and the leading indicator of the economy’s health. In addition, the U.S. Federal Reserve is to publish the minutes of its November policy meeting.
Wednesday, November 23
The U.S. is to publish a string of economic data, including a government report on durable goods orders, a leading indicator of production. The country is also to publish its weekly report on initial jobless claims, in addition to data on crude oil stockpiles, inflation, personal income and personal spending. Meanwhile, the University of Michigan is to release revised data on inflation expectations and consumer sentiment.
New Zealand is to release government data on the trade balance, the difference in value between imported and exported goods over the reported month.
Thursday, November 24
Markets in the U.S. are to remain closed for the Thanksgiving holiday.
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