Forexpros – The New Zealand dollar ended the week sharply lower against its U.S. counterpart on Friday, as risk sentiment was dampened by renewed concerns over the handling of the debt crisis in the euro zone.
NZD/USD hit 0.7804 on Thursday, the pair’s lowest since October 12; the pair subsequently consolidated at 0.7931 by close of trade on Friday, tumbling 3.31% over the week.
The pair is likely to find support at 0.7804, the low of November 3 and resistance at 0.8066, the high of October 25.
The kiwi rebounded from a three-week low on Thursday after the European Central Bank lowered its interest rate to 1.25% from 1.50% as the region’s escalating debt crisis overshadowed concerns over persistently high inflation.
Speaking at the bank’s post policy meeting press conference, new president Mario Draghi said that ongoing tensions in financial markets could slow the pace of growth in the euro zone and said the region’s economy continued to be “subject to particularly high uncertainty and intensified downside risks.”
Also Thursday, official data showed that the New Zealand unemployment rate rose unexpectedly to 6.6% in the third quarter after a reading at 6.5% in the previous quarter.
Market sentiment broadly weakened on Friday after German Chancellor Angela Merkel said that few countries in the Group of 20 nations had committed to providing more resources for the euro zone’s rescue fund.
Investors were also jittery ahead of a government confidence vote in Greece, scheduled late Friday evening. Despite strong internal opposition, Papandreou’s government passed the vote by a very narrow margin.
The kiwi dropped over 1.5% on Tuesday after Greek Prime Minister George Papandreou announced a referendum on the country’s latest bailout program and a report showed that Chinese manufacturing activity fell to its lowest level since February 2009 in October. China is New Zealand’s second largest export destination.
In the week ahead, developments in Greece will remain in focus, as opposition parties are calling for early elections while George Papandreou is pushing for a cross-party government to implement the latest European aid package.
Investors will also be closely watching for a U.S. weekly report on unemployment claims as well as the Reserve Bank of New Zealand’s financial stability report.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, November 7
The U.S. is to produce an official report on consumer credit, a leading indicator of consumer spending and confidence.
Tuesday, November 8
In the U.S., Federal Open Market Committee members Narayana Kocherlakota and Charles Plosser are due to speak.
Wednesday, November 9
The Reserve Bank of New Zealand is to produce its financial stability report.
In the U.S., Federal Reserve Chairman Ben Bernanke is due to deliver welcoming remarks at the Federal Reserve Conference on Small Business and Entrepreneurship during an Economic Recovery. An official report on U.S. crude oil inventories is also to be released later Wednesday.
Thursday, November 10
The U.S. is also to release a report on trade balance as well as weekly data on unemployment claims. Later in the day, government reports are to be released on import prices and federal budget balance.
Friday, November 11
The U.S. is to round up the week with the University of Michigan’s preliminary report on consumer sentiment.
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