Investing.com - The New Zealand dollar slumped to the lowest level in nearly four years against its U.S. counterpart on Friday, after data showed that the U.S. economy grew less than forecast in the final three months of last year.
NZD/USD hit 0.7216 on Friday, the pair's lowest since March 2011, before subsequently consolidating at 0.7255 by close of trade on Friday, down 0.18% for the day and 2.61% lower for the week.
The kiwi lost 6.9% against the greenback in January as mounting concerns over the health of the global economy dampened appetite for growth-linked assets.
The Commerce Department said in a report Friday that the economy expanded 2.6% in the final three months of 2014, below expectations for a 3.0% gain and slowing sharply from growth of 5.0% in the three months to September.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, ended the week at 95.00, down 0.01% for the day and 0.33% lower on the week.
The dollar had strengthened broadly on Thursday after the Federal Reserve indicated that interest rates could start to rise around mid-year.
Following its policy meeting on Wednesday, the Fed said it would keep rates on hold at least until June and reiterated its pledge to be patient on raising interest rates, while acknowledging the solid economic recovery and strong growth in the labor market.
Meanwhile, the Reserve Bank of New Zealand opened the door to a possible rate cut following its monthly policy meeting on Wednesday.
The RBNZ held its benchmark interest rate at a record-low 3.50% and signaled that it is prepared to lower borrowing costs further as plunging oil prices dampen inflation.
"Future interest-rate adjustments, either up or down, will depend on the emerging flow of economic data," RBNZ Governor Graeme Wheeler commented.
In the week ahead, investors will be turning their attention to Friday’s U.S. nonfarm payrolls report for further indications on the strength of the recovery in the labor market.
New Zealand employment data due on Wednesday will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, February 2
China is to release a report on the HSBC manufacturing index. The Asian nation is New Zealand's second-largest trade partner.
In the U.S., the Institute of Supply Management is to release data on manufacturing activity. The country will also produce a report on personal income and spending.
Tuesday, February 3
The U.S. is to release data on factory orders.
Wednesday, February 4
New Zealand is to release data on the change in the number of people unemployed and the unemployment rate.
The U.S. is to release a report on ADP nonfarm payrolls. Later in the day, the Institute of Supply Management is to release data on non-manufacturing activity.
Thursday, February 5
The U.S. is to produce its weekly report on initial jobless claims in addition to data on the trade balance.
Friday, February 6
The U.S. is to round up the week with the closely watched nonfarm payrolls report, and data on wage growth.