Forex - NZD/USD weekly outlook: December 15 - 19

Investing.com - The New Zealand dollar edged lower against its U.S. counterpart on Friday, as upbeat U.S. consumer sentiment data added to expectations that the Federal Reserve could raise interests sooner and faster than previously expected.

NZD/USD hit 0.7607 on Tuesday, the pair's lowest since June 2012, before subsequently consolidating at 0.7778 by close of trade on Friday, down 0.49% for the day but 0.8% higher for the week.

The pair is likely to find support at 0.7660, the low from December 10, and resistance at 0.7870, the high from December 11.

The preliminary reading of the University of Michigan's consumer sentiment index released Friday rose to 93.8, the highest level since January 2007 and ahead of forecasts of 89.7.

Consumer sentiment was boosted by the improving outlook for employment and wage growth and lower gasoline prices.

The data underpinned expectations for a hike in U.S. interest rates by the Federal Reserve next year.

Economic reports pointing to a slowdown in China also fuelled risk aversion.

Official data released Friday showed that industrial production in China rose 7.2% in November, missing expectations for an increase of 7.5% and slowing from a 7.7% gain in October.

The disappointing data added to fears that China will miss its annual growth target of 7.5% and boosted speculation that the government will need to roll out fresh stimulus measures to avert a sharper slowdown.

The Asian nation is New Zealand's second-largest trade partner.

Meanwhile, the Reserve Bank of New Zealand held its benchmark interest rate at 3.50% on Thursday and added that "some further increase in the official cash rate is expected to be required at a later stage."

Commenting on the decision, RBNZ Governor Graeme Wheeler said that "gradual increases in interest rates will still be needed as the economy expands at around 3% a year and the country's jobless rate falls."

In the week ahead, investors will be awaiting the outcome of Wednesday’s Federal Reserve policy meeting amid speculation that policymakers could drop an assurance that interest rates will stay low for a "considerable time".

A report on third quarter economic growth out of New Zealand will also be closely watched.

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

Monday, December 15

The U.S. is to release reports on manufacturing activity in the New York region and industrial production.

Tuesday, December 16

China is to publish the preliminary reading of its HSBC manufacturing index.

The U.S. is to publish reports on building permits and housing starts.

Later in the day, New Zealand is to release data on its current account.

Wednesday, December 17

The U.S. is to release data on consumer inflation and the current account.

Later Wednesday, the Federal Reserve is to publish its rate statement and economic projections for the next two years. Fed Chair Janet Yellen is to hold what will be a closely watched press conference.

New Zealand is to release data on gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.

Thursday, December 18

The U.S. is to release data on initial jobless claims and manufacturing activity in the Philadelphia region.

Friday, December 19

New Zealand is to release private sector data on business confidence.