Forex Pros - Last week saw the New Zealand dollar jump to two-week high against its U.S. counterpart on Friday, after the country's government outlined a budget projecting a return to surplus in four years.
NZD/USD hit 0.7997 on Friday, the pair's highest since May 3; the pair subsequently consolidated at 0.7955 by close of trade, jumping 1.35% over the week.
The pair was likely to find short-term support at 0.7860, Thursday's low and resistance at 0.8064, the high of May 3.
New Zealand's government on Thursday unveiled a budget that targeted a narrower deficit for the next fiscal year through deep spending cuts, setting it on course for an operating surplus of NZD1.3 billion by the year ending June 2015.
Finance Minister Bill English said the government would save NZD5.2 billion over four years to spend on health, education and rebuilding from two earthquakes in Christchurch.
Ratings agency Standard & Poor's, which has New Zealand's AA+ sovereign rating on negative outlook, suggested the rating was secure as long as budget targets are met.
Meanwhile, data on Thursday showing a slowdown in manufacturing growth in the U.S. Mid-Atlantic region and an unexpected dip in existing home sales in April underlined the view that the Federal Reserve is unlikely to tighten policy for some time to come.
At present, benchmark interest rates are 2.5% in New Zealand, compared with zero in the U.S., attracting investors to the nation's higher-yielding currency.
The kiwi was boosted on Tuesday after official data showed that producer input prices gained 2.2% in the first quarter from 0.9% the previous quarter and output prices advanced 1.7%. Analysts had expected PPI to increase by 0.6% in the first quarter.
Looking ahead to the coming week, U.S. data on durable goods and a second look at first quarter GDP will be a major focus of attention, while New Zealand is to publish a report on inflation expectations. The guide skips Monday, as there are no relevant events on this day.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Tuesday, May 24
The Reserve Bank of New Zealand is to publish a report on inflation expectations.
Later in the day, the U.S. is to publish government data on new home sales, a leading indicator of economic health.
Wednesday, May 25
The U.S. is to publish official data on durable goods orders, a leading indicator of production, as well as a government report on crude oil stockpiles.
Thursday, May 26
The U.S. is to publish revised data on first quarter GDP, the broadest measure of economic activity and the primary gauge of the economy's health. The U.S. is also to publish its weekly report on initial jobless claims.
Friday, May 27
The U.S. is to round up the week with a slew of economic data, including government reports on personal income and spending and industry data on pending home sales, while the University of Michigan is to publish revised data on consumer sentiment and inflation expectations.