Investing.com – The New Zealand dollar rallied to a 26-year high against its U.S. counterpart on Friday, after weaker-than-expected employment data added to concerns over the U.S. economic recovery and underlined the view that the Federal Reserve was unlikely to tighten policy for some time to come.
NZD/USD hit 0.8383 on Friday, the pair’s highest since exchange rate controls ended in March 1985; the pair subsequently consolidated at 0.8376 by close of trade on Friday, climbing 1.2% over the week.
The pair was likely to find support at 0.8254, Thursday’s low and resistance at 0.8400.
The U.S. Department of Labor said on Friday that nonfarm payrolls rose by a disappointing 18,000 in June, well below expectations for an increase of 89,000, as employers hired the fewest workers in nine months.
The previous month’s figure was revised down to a gain of 22,000 from a previously reported 54,000.
The June unemployment rate rose unexpectedly from 9.1% to 9.2%, the highest level in six months, raising expectations that U.S. interest rates would remain at a record low well into next year.
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.
On Tuesday, a report from the New Zealand Institute of Economic Research showed that business confidence rebounded strongly in the June quarter, following the Christchurch earthquake.
According to the data, 27% of companies surveyed expected the economy to improve in the next six months. In the previous survey, a net 27% saw a deterioration.
In the week ahead, investors will be looking towards official data on retail sales and consumer prices to gauge the strength of the U.S. economic recovery, while New Zealand is to release official data on first quarter gross domestic product.
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 Monday, as there are no relevant events on this day.
Tuesday, July 12
The U.S. is to publish official data on its trade balance, while the Federal Reserve is to publish the minutes of the June policy-setting meeting. The minutes give investors a detailed insight into the economic and financial conditions that influenced the interest rate decision.
Wednesday, July 13
New Zealand is to produce data on food price inflation, a leading indicator of consumer price inflation.
Later in the day, the U.S. is to publish official data on import prices and crude oil inventories, as well as a report on the federal budget balance.
In addition, Federal Reserve Chairman Ben Bernanke is to give prepared testimony on monetary policy before lawmakers in Washington.
Thursday, July 14
New Zealand is to publish official data on first quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy's health.
Meanwhile, the U.S. is to release a string of economic data, beginning with a report on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.
The country is also to release official data on producer price inflation, a leading indicator of consumer inflation, as well as weekly government data on initial jobless claims. Also Thursday, Fed Chair Ben Bernanke is to deliver the second part of his testimony on monetary policy in Washington.
Friday, July 15
The U.S. is to round up the week with a flurry of economic data, with reports on consumer price inflation, which accounts for a majority of overall inflation. In addition, the U.S. is to publish a report on manufacturing activity in New York state, as well as government data on industrial production and the capacity utilization rate.
Meanwhile, the University of Michigan is to publish preliminary data on consumer sentiment and inflation expectations.
NZD/USD hit 0.8383 on Friday, the pair’s highest since exchange rate controls ended in March 1985; the pair subsequently consolidated at 0.8376 by close of trade on Friday, climbing 1.2% over the week.
The pair was likely to find support at 0.8254, Thursday’s low and resistance at 0.8400.
The U.S. Department of Labor said on Friday that nonfarm payrolls rose by a disappointing 18,000 in June, well below expectations for an increase of 89,000, as employers hired the fewest workers in nine months.
The previous month’s figure was revised down to a gain of 22,000 from a previously reported 54,000.
The June unemployment rate rose unexpectedly from 9.1% to 9.2%, the highest level in six months, raising expectations that U.S. interest rates would remain at a record low well into next year.
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.
On Tuesday, a report from the New Zealand Institute of Economic Research showed that business confidence rebounded strongly in the June quarter, following the Christchurch earthquake.
According to the data, 27% of companies surveyed expected the economy to improve in the next six months. In the previous survey, a net 27% saw a deterioration.
In the week ahead, investors will be looking towards official data on retail sales and consumer prices to gauge the strength of the U.S. economic recovery, while New Zealand is to release official data on first quarter gross domestic product.
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 Monday, as there are no relevant events on this day.
Tuesday, July 12
The U.S. is to publish official data on its trade balance, while the Federal Reserve is to publish the minutes of the June policy-setting meeting. The minutes give investors a detailed insight into the economic and financial conditions that influenced the interest rate decision.
Wednesday, July 13
New Zealand is to produce data on food price inflation, a leading indicator of consumer price inflation.
Later in the day, the U.S. is to publish official data on import prices and crude oil inventories, as well as a report on the federal budget balance.
In addition, Federal Reserve Chairman Ben Bernanke is to give prepared testimony on monetary policy before lawmakers in Washington.
Thursday, July 14
New Zealand is to publish official data on first quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy's health.
Meanwhile, the U.S. is to release a string of economic data, beginning with a report on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.
The country is also to release official data on producer price inflation, a leading indicator of consumer inflation, as well as weekly government data on initial jobless claims. Also Thursday, Fed Chair Ben Bernanke is to deliver the second part of his testimony on monetary policy in Washington.
Friday, July 15
The U.S. is to round up the week with a flurry of economic data, with reports on consumer price inflation, which accounts for a majority of overall inflation. In addition, the U.S. is to publish a report on manufacturing activity in New York state, as well as government data on industrial production and the capacity utilization rate.
Meanwhile, the University of Michigan is to publish preliminary data on consumer sentiment and inflation expectations.