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Forex - NZD/USD weekly outlook: August 18 - 22

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Investing.com -

Investing.com - The New Zealand dollar ended the week slightly lower against its U.S. counterpart on Friday, as demand for riskier assets weakened amid fears that the conflict between Ukraine and Russia will escalate further.

NZD/USD hit 0.8513 on Thursday, the pair's highest since August 5, before subsequently consolidating at 0.8485 by close of trade on Friday, down 0.08% for the day but still 0.27% higher for the week.

The pair is likely to find support at 0.8454, the low from August 14 and resistance at 0.8513, the high from August 14.

Fears that the conflict between Ukraine and Russia will escalate mounted on Friday after Ukraine said its forces had attacked and partly destroyed a Russian armored convoy that entered Ukrainian territory overnight.

Separately, NATO's secretary-general said the organization observed a Russian "incursion" into Ukraine on Thursday night, which was denied by Moscow.

Elsewhere, in the U.S., data showed that the University of Michigan consumer sentiment ticked down to a nine-month low of 79.2 in August from 81.8 in July. Analysts had expected the index to rise to 82.5 this month.

A separate report from the New York Federal Reserve said that its Empire State manufacturing index fell to a four-month low of 14.69 this month, from a reading of 25.60 in July, worse than expectations for a decline to 20.0.

Also Friday, the Federal Reserve said U.S. industrial production rose 0.4% in July, beating expectations for a 0.3% gain.

Meanwhile, U.S. producer price inflation rose 0.1% on year last month, in line with expectations. Core producer price inflation, which excludes food, energy and trade, rose 0.2% in July, also in line with market projections.

The disappointing data prompted traders to trim bets the Federal Reserve will begin raising rates in the first half of next year.

The New Zealand dollar was boosted on Thursday after official data showed that retail sales in New Zealand rose 1.2% in the last quarter, beating expectations for an increase of 1.0%.

Core retail sales, which exclude automobiles and gas stations, advanced 1.2% in the second quarter, compared to expectations for a 1.1% rise.

Data from the Commodities Futures Trading Commission released Friday showed that speculators decreased their bullish bets on the New Zealand dollar in the week ending August 12.

Net longs totaled 13,429 contracts, down slightly from net longs of 14,500 in the preceding week.

In the week ahead, investors will be anticipating an annual meeting of top central bank officials and economists in Jackson Hole, Wyoming from August 21 to 23.

The spotlight will be on Fed Chair Janet Yellen, who will speak on Friday in her first appearance at Jackson Hole as head of the U.S. central bank.

Market watchers will also pay close attention to the minutes of the Fed's July policy meeting due to be published on Wednesday for further clues about the timing of future interest rate hikes.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, August 18

The U.S. is to produce private sector data on the housing market.

Tuesday, August 19

New Zealand is to release reports on producer price inflation and inflation expectations.

The U.S. is to release reports on building permits, housing starts and consumer inflation.

Wednesday, August 20

The Federal Reserve is to publish the minutes of its latest policy meeting.

Thursday, August 21

China is to release the preliminary reading of the HSBC manufacturing index. The Asian nation is New Zealand's second largest trade partner.

The U.S. is to produce data on unemployment claims, manufacturing activity and existing home sales.

The first day of the annual economic symposium is due to take place in Jackson Hole, Wyoming.

Friday, August 22

Fed Chair Janet Yellen and ECB President Mario Draghi are both to speak at the second day of the annual economic symposium in Jackson Hole, Wyoming.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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