Forex - NZD/USD weekly outlook: March 23 - 27

Investing.com - The New Zealand dollar jumped to a more than two-week high against its U.S. counterpart on Friday, as markets pushed back expectations for the first U.S. rate hike after the Federal Reserve downgraded its outlook on growth and inflation.

NZD/USD hit 0.7592 on Friday, the pair's highest since March 5, before subsequently consolidating at 0.7566 by close of trade on Friday, up 2.04% for the day and 3.08% higher for the week.

The sharp drop in the dollar came about amid uncertainty over the path of U.S. monetary policy after the Federal Reserve downgraded its forecasts for growth and inflation and lowered its interest rate projections on Wednesday.

The Fed statement dampened expectations for a mid-year rate hike, prompting investors to exit positions which would benefit from a strong dollar.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, tumbled 1.4% on Friday to end at 98.05, moving further away from a 12-year high of 100.78 hit on March 13.

For the week, the dollar index lost 2.53%, the biggest weekly decline since October 2011.

Meanwhile, official data on Thursday showed that New Zealand's economy grew 0.8% in the fourth quarter of 2014, in line with expectations and down from 0.9% in the previous quarter.

The Reserve Bank of New Zealand left interest rates on hold at 3.5% earlier in the month, citing strong economic growth.

In the week ahead, investors will be focusing on Tuesday’s U.S. inflation report after Fed Chair Janet Yellen warned last week that the stronger dollar was pushing down consumer prices.

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

Monday, March 23

The U.S. is to release a report on existing home sales.

Tuesday, March 24

China is to release the preliminary reading of the HSBC (LONDON:HSBA) manufacturing index. The Asian nation is New Zealand's second largest trade partner.

The U.S. is to release data on consumer price inflation and new home sales.

Later in the trading day New Zealand is to report on the trade balance.

Wednesday, March 25

The U.S. is to publish data on durable goods orders.

Thursday, March 26

The U.S. is to release weekly data on initial jobless claims.

Friday, March 27

The U.S. is to round up the week with final data on fourth quarter economic growth and the revised reading of the University of Michigan consumer sentiment index.