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

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Investing.com - The New Zealand dollar ended Friday's session at a four-day high against its U.S. counterpart, as U.S. inflation data indicated that the Federal Reserve had sufficient scope to continue its quantitative easing program.

NZD/USD hit 0.8277 on Friday, the pair's highest since March 11; the pair subsequently consolidated at 0.8271 by close of trade, 0.66% higher for the week.

The pair is likely to find support at 0.8161, Wednesday's low and resistance at 0.8282, the high from March 11.

The Labor Department reported that U.S. consumer price inflation rose 0.7% in February, bringing the annualized rate of consumer inflation to 2.0%.

Core consumer prices, which exclude volatile food and energy costs, also rose 2% year-on-year.

In December, the U.S. central bank said an "exceptionally low" target interest rate is appropriate as long as inflation isn't forecast to rise to more than 2.5%.

Sentiment on the dollar was also hit after data showed that the University of Michigan's consumer sentiment index dropped to 71.8 in March, the lowest level since December 2011, from a final reading of 77.6 in February.

The disappointing data sparked profit taking ahead of an upcoming Federal Reserve policy meeting after a recent string of strong U.S. economic data reinforced optimism over the country's economic recovery and saw the dollar strengthen across the board.

Meanwhile, the kiwi was little changed after the Reserve Bank of New Zealand held the benchmark interest rate unchanged at a record low of 2.50%.

Central bank officials threatened however to cut interest rates in the future, if the currency appreciates unreasonably.

Elsewhere, the kiwi was higher against the euro on Friday, with EUR/NZD dipping 0.09% to hit 1.5801.

Sentiment on the euro remained fragile amid ongoing concerns over the economic outlook for the euro zone and political uncertainty in Italy.

In the week ahead investors will be focusing on Wednesday's Federal Reserve policy statement, amid speculation over an earlier-than-expected end to the bank's asset purchase program.

Fed Chairman Ben Bernanke is to give a press conference after the release of the policy statement.

Markets will also be eyeing the release of gross domestic data in New Zealand.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday and Friday, as there are no relevant events on these days.

Tuesday, March 19

The U.S. is to release official data on building permits, a leading indicator of future construction activity, and data on housing starts.

Wednesday, March 20

In the U.S., the Federal Reserve is to announce the federal funds rate and release its rate statement and quarterly economic projections. The announcement is to be followed by a press conference with Fed Chairman Ben Bernanke to discuss monetary policy and the economic outlook.

Later Wednesday, New Zealand is to publish official data on fourth quarter economic growth, the broadest indicator of economic activity and the leading measure of the economy's health.

Thursday, March 21

The U.S. is to release the weekly government report on initial jobless claims, as well as industry data on existing home sales and official data on manufacturing activity in Philadelphia.

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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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