Investing.com - The New Zealand dollar edged lower against its U.S. counterpart on Friday, as concerns over the global economic outlook sapped investor demand for growth-linked assets.
NZD/USD hit 0.7973 on Thursday, the pair’s highest level since September 25, before subsequently consolidating at 0.7814 by close of trade on Friday, down 0.64% for the day but still 0.65% higher for the week.
The pair is likely to find support at 0.7782, the low from October 8, and resistance at 0.7973, the high from October 9.
Market sentiment was hit by fears that Germany, the euro zone’s largest economy is being dragged into a recession after recent data indicated unexpected weakness in manufacturing and exports.
Steep declines in commodity prices also fuelled fears that the global economy is slowing. Brent crude prices fell to their lowest level in almost four years on Friday.
Earlier in the week, the International Monetary Fund cut its forecasts for global growth in 2014 and 2015 and warned that the recovery remains weak and uneven.
The dollar weakened after the minutes of the Federal Reserve’s September meeting released Wednesday showed that some officials were concerned over a slowdown in global growth and the impact of the stronger dollar on the U.S. inflation outlook.
"Some participants expressed concern that the persistent shortfall of economic growth and inflation in the euro area could lead to a further appreciation of the dollar and have adverse effects on the U.S. external sector," the minutes said.
The minutes prompted investors to trim back expectations for an earlier-than-expected hike in U.S. interest rates.
On Friday, Fed Vice Chairman Stanley Fischer said weaker-than-expected global growth could prompt it to slow the pace of eventual interest rate hikes.
The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, ended the week down 1% at 85.92. The move ended a 12-week rally that saw the index gain more than 8% since early July.
Data from the Commodities Futures Trading Commission released Friday showed that speculators turned bearish on the New Zealand dollar in the week ending October 7.
Net shorts totaled 100 contracts, compared to net longs of 64 in the preceding week.
In the week ahead, investors will be awaiting U.S. data on retail sales and industrial production for fresh indications on the strength of the economic recovery.
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 Tuesday as there no relevant events on this day.
Monday, October 13
Markets in the U.S. will be closed for Columbus Day.
Wednesday, October 15
The U.S. is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The country is also to report on producer prices and manufacturing activity in the New York region.
Thursday, October 16
New Zealand is to publish private sector data on manufacturing activity.
The U.S. is to release the weekly report on initial jobless claims as well as data on industrial production and manufacturing activity in the Philadelphia region.
Friday, October 17
The U.S. is to round up the week with reports on building permits and housing starts, as well as a preliminary report on consumer sentiment.