Forex - NZD/USD weekly outlook: June 22 - 26

Investing.com - The New Zealand dollar ended Friday's session close to a five-year low against its U.S. counterpart, one day after data showed that New Zealand's economy grew at a slower pace than expected in the first quarter.

NZD/USD hit 0.6878 on Wednesday, the pair's weakest level since July 6, 2010, before subsequently consolidating at 0.6910 by close of trade on Friday, down 0.23% for the day.

For the week, the pair fell 1.06%, the ninth consecutive weekly decline, amid growing expectations for a rate cut in New Zealand and increasing speculation that the Federal Reserve would raise interest rates later this year.

The kiwi came under broad selling pressure after Statistics New Zealand reported on Thursday that the country\'s gross domestic product rose by 0.2% in the first quarter, confounding expectations for an increase of 0.6%, following a growth rate of 0.8% in the last three months of 2014.

Year-on-year, New Zealand\'s economy expanded 2.6% in the three months to March, less than the expected 3.0% increase and after a growth rate of 3.5% in the fourth quarter of 2014.

Meanwhile, the Federal Reserve lowered both its U.S. growth forecast and its interest-rate projections following the conclusion of its policy meeting on Wednesday, prompting investors to push back expectations on the timing of an initial rate hike.

Fed Chair Janet Yellen said the central bank wanted to see “more decisive evidence” of sustained growth before raising rates, but acknowledged that the economy has “expanded moderately” after a weak first quarter.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell to a five-week low of 93.30 on Thursday, before recovering to end at 94.32 by late-Friday. The index still ended the week down 1.02%, the third straight weekly decline.

Elsewhere, investors continued to monitor developments surrounding talks between Greece and its international creditors, amid growing concerns that the country could default on its debt be forced out of the euro zone.

Greece is running out of time before it owes the International Monetary Fund a bundled loan payment of €1.5 billion on June 30. At the same time, the remaining €7.2 billion of a €240 billion stimulus package from its international creditors is set to expire at the month.

All 28 members of the European Union are scheduled to be present at an emergency summit on Monday, in what could be Greece\'s final opportunity to avoid a default. Failure to strike a deal would result in Greece defaulting on payments and exiting the euro zone.

In the week ahead, investors will be focusing on key U.S. housing data as well as a report on durable goods orders, for fresh indications on the strength of the economy and the timing of a rate increase.

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

Monday, June 22

Markets in China are to remain closed for the Dragon Boat Festival holiday.

European leaders are to hold emergency talks in Brussels about Greece’s bailout agreement, which is due to expire on June 30.

The U.S. is to release private sector data on existing home sales.

Tuesday, June 23

China is to publish the preliminary reading of the HSBC manufacturing index.

The U.S. is to release reports on durable goods orders, manufacturing activity and new home sales.

Wednesday, June 24

The U.S. is to release revised data on first quarter economic growth.

Thursday, June 25

The U.S. is to release the weekly report on initial jobless claims as well as data on consumer spending.

Friday, June 26

New Zealand is to report on the trade balance.

The U.S. is to round up the week with revised data on consumer sentiment.