Investing.com - The New Zealand dollar ended Friday's session close to the lowest level since July 2009 against its U.S. counterpart, amid increasing speculation that the Federal Reserve would raise interest rates later this year and growing expectations for a rate cut in New Zealand.
NZD/USD hit 0.6496 on Thursday, the pair's weakest level since July 2009, before subsequently consolidating at 0.6522 by close of trade on Friday, up 0.15% for the day. For the week, the pair fell 3.17%.
Data on Friday showed that U.S. consumer prices rose 0.3% in June, the fifth consecutive monthly increase, while core prices, which exclude food and energy, increased 0.2% last month, adding to signs of firming inflation.
A separate report showed that U.S. housing starts surged 9.8% to 1.174 million units in June. Analysts had expected housing starts to increase by 6.2% last month.
Meanwhile, U.S. building permits jumped 7.4% to 1.343 million units in June, the most since July 2007, pointing to a rapidly strengthening housing market.
Federal Reserve Chair Janet Yellen said earlier in the week that the central bank was on track to raise interest rates by the end of the year if the economy continues to grow as expected.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, inched up 0.3% to end at 98.09 late Friday, the strongest level since April 23.
For the week, the index rose 1.9%, the biggest weekly gain since May, amid growing indications that a rate hike is coming in the U.S. later this year.
Meanwhile, in New Zealand, data on Thursday showed that consumer prices rose 0.4% in the second quarter, less than the expected increase of 0.6%.
The softer than expected inflation data fueled speculation that policymakers will have to do more to boost consumer prices and stimulate growth.
The Reserve Bank of New Zealand will review the official cash rate on July 23 and expectations are for a cut of 25 basis points to 3.0%.
In the week ahead, market players will focus on U.S. data on home sales and jobless claims for further indications on the strength of the economy and the timing of an interest rate hike.
A rate decision in New Zealand 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. The guide skips Monday and Tuesday as there is no relevant data on these days.
Wednesday, July 22
The U.S. is to release private sector data on existing home sales.
Thursday, July 23
The Reserve Bank of New Zealand is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
Later Thursday, the U.S. is to report on initial jobless claims.
Friday, July 24
New Zealand is to report on the trade balance.
China is to publish the preliminary reading of the HSBC manufacturing index.
The U.S. is to round up the week with reports on manufacturing activity and new home sales.