Forexpros – The New Zealand dollar ended the week higher against its U.S. counterpart on Friday, as market sentiment improved amid upbeat U.S. data while investors remained concerned over the handling of the debt crisis in the euro zone.
NZD/USD hit 0.7774 on Wednesday, the pair’s highest since December 8; the pair subsequently consolidated at 0.7740 by close of trade on Friday, climbing 1.32% over the week.
The pair is likely to find support at 0.7651, the low of December 21 and resistance at 0.7812, the high of December 1.
Trading volumes remained thin ahead of the Christmas holiday weekend, resulting in quiet trade.
The kiwi rose to a nine-day high against the greenback on Wednesday, before paring some of the day’s gains after an unprecedented EUR489.19 billion three-year loan by the European Central Bank.
Markets were hoping the move would avoid a credit crunch in the euro zone and help increase bond purchases of indebted euro zone countries. But the heavy demand from 523 European lenders underlined concerns over the scale of the financial crisis in the single currency bloc.
Earlier in the day, official data showed that New Zealand’s current account balance fell more-than-expected in the fourth quarter, dropping to a deficit of NZD4.60 billion from a deficit of NZD0.92 billion in the previous quarter.
The kiwi extended gains on Thursday, after a report showed that New Zealand’s economy expanded by 0.8%, beating expectations for a 0.6% gain. New Zealand’s GDP grew by an unrevised 0.1% in the previous quarter.
Also Thursday, a report by the University of Michigan’s said its index of overall consumer sentiment rose to 69.9 in December, exceeding expectations for a rise to 68.2, while a separate report showed that the number of people who filed for unemployment assistance in the U.S. in the week ending December 16 fell to the lowest level since April 2008.
The data came after the Bureau of Economic Analysis said gross domestic product increased at a seasonally adjusted annual rate of 1.8% during the third quarter, down from a previous estimate of 2.0%.
The data primarily reflected a downward revision to personal consumption, which grew 1.6% compared to a previous estimate of 2.3%. Consumer spending typically accounts for nearly 70% of U.S. economic growth.
Sentiment remained supported after official data showed on Friday that U.S. home sales rose more-than-expected in November. A separate report showed that U.S. core durable goods orders also rose-more-than-expected last month, advancing 3.8% from 0.0% in October.
But the kiwi’s gains were capped by sustained speculation over possible mass downgrades in the euro zone.
In the week ahead trading volumes are expected to remain light because many traders have closed books to lock in profit before the end of the year, reducing liquidity in the market and increasing the volatility.
Meanwhile, the U.S. is to release key reports on consumer confidence, jobless claims and home sales.
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, December 26
Markets in the U.S. and New Zealand will be remaining closed for the Boxing Day holiday.
Tuesday, December 27
The U.S. is to publish industry data on house price inflation, a leading indicator of demand in the housing market. The U.S. is also to release data on consumer confidence and manufacturing activity in Richmond.
Wednesday, December 28
The U.S. is to release the treasury currency report.
Thursday, December 29
The U.S. is to publish its weekly government report on initial jobless claims, as well as industry data on pending home sales, a leading indicator of economic health. The U.S. is also to release official data on crude oil stockpiles and industry data on business conditions in the Chicago area, a leading indicator of economic health.
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