Forex - NZD/USD weekly outlook: January 12 - 16

Investing.com - The New Zealand dollar hit the highest level in more than a month against its U.S. counterpart on Friday, after an unexpected decline in U.S. average hourly wages caused investors to rethink when the Federal Reserve would begin raising rates.

NZD/USD hit 0.7849 on Friday, the pair's highest since December 11, before subsequently consolidating at 0.7839 by close of trade on Friday, up 0.19% for the day and 1.73% higher for the week.

The pair is likely to find support at 0.7761, the low from January 8, and resistance at 0.7870, the high from December 11.

The Labor Department reported that the U.S. economy added 252,000 jobs in December, above expectations for jobs growth of 240,000.

The unemployment rate ticked down to a six-and-a-half year low 5.6% from 5.8% in November. Economists had forecast a decline to 5.7%.

But according to the data, average earnings fell by 0.2% in December, missing expectations for a 0.2% increase and were up by only 1.7% from a year earlier.

The drop in average earnings prompted investors to take profits in the dollar, as markets pushed back expectations for the first hike in U.S. interest rates to late-2015 from mid-2015 before the report.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.39% to 92.18 late Friday, off the 12-year peaks of 92.76 reached in the previous session.

Also Friday, China said that consumer prices rose 1.5% year-on-year, just above expectation of 1.4% and producer prices fell 3.3%, narrowly more than expected.

The disappointing data fuelled fears that China will miss its annual growth target of 7.5% and added to 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.

In the week ahead, the economic calendar is light, but markets will be looking ahead to Wednesday’s report on U.S. retail sales, as well as Friday’s data on consumer sentiment for further indications on the strength of the economy.

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

Monday, January 12

In the U.S., Atlanta Federal Reserve President Dennis Lockhart is to speak.

Tuesday, January 13

China is to publish a report on the trade balance.

Wednesday, January 14

The U.S. is to produce data on retail sales, in addition to reports on import prices and business inventories.

Thursday, January 15

The U.S. is to publish the weekly report on initial jobless claims as well as data on producer prices and manufacturing activity in the Philadelphia region.

Friday, January 16

The U.S. is to round up the week with a report on industrial production and preliminary data on consumer sentiment.