Forexpros – The New Zealand dollar rallied to a three-week high against its U.S. counterpart on Friday, before paring some of the week’s gains as sustained concerns over the debt crisis in the euro zone weighed on market sentiment.
NZD/USD hit 0.7838 on Friday, the pair’s highest since November 14; the pair subsequently consolidated at 0.7768 by close of trade on Friday, surging 2.46% over the week.
The pair is likely to find support at 0.7669, the low of November 15 and resistance at 0.7870, the high of November 11.
The kiwi found support on Friday after official data showed that the U.S.
unemployment rate dropped unexpectedly to a two-and-a-half year low of 8.6% in November, as the U.S. economy created 120,000 new jobs.
But risk appetite was hit amid skepticism over whether the euro zone’s bailout fund, the European Financial Stability Facility, can contain the region’s debt crisis and amid speculation over a potential downgrade of Spain.
On Thursday, ECB President Mario Draghi indicated that the bank was ready to take stronger action to fight the region’s debt crisis if political leaders can agree on much tighter budget controls at the summit.
The New Zealand dollar jumped 2.46% against the greenback on Wednesday after six major central banks announced a coordinated action to enhance the capacity to provide liquidity to the global financial system.
In a joint statement, the Federal Reserve, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank said they had agreed to lower dollar swap rates to prevent a lack of liquidity in the global financial system.
The announcement came after China said that it plans to cut bank’s reserve requirement ratios in an effort to help boost liquidity and support the world’s second largest economy amid global market turmoil.
Also Wednesday, official data showed that building consents in New Zealand climbed 11.2% in October, after a 17.2% decline the previous month.
September’s figure had been revised down from minus 17.1%.
In the week ahead, investors will be closely watching the ECB’s policy meeting on Thursday, amid expectations for a 0.5% rate cut by the bank. Meanwhile, EU leaders are to hold a summit meeting to address the region’s crisis on Friday.
Also next week, the U.S. is to release data on service sector activity and jobless claims, while the Reserve Bank of New Zealand is to announce it benchmark interest rate.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets. The guide skips Tuesday, as there are no relevant events on this day.
Monday, December 5
In the U.S., the Institute of Supply Management is to release a report on service sector activity, a leading indicator of economic health. The U.S. is also to publish government data on factory orders, a leading indicator of production.
Wednesday, December 7
The Reserve Bank of New Zealand is to announce its benchmark interest rate. The bank’s rate statement will be closely watched for its insights on the economic outlook.
Later in the day, the U.S. is to release government data on crude oil stockpiles.
Thursday, December 8
The U.S. is to publish its weekly report on initial jobless claims, the nation’s earliest economic data.
Friday, December 9
The U.S. is to round up the week with data on the trade balance, while the University of Michigan is to release preliminary data on consumer sentiment and inflation expectations, leading indicators of economic health.
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