Forex - NZD/USD weekly outlook: May 4 - 8

Investing.com - The New Zealand dollar fell to a more than two-week low against its U.S. counterpart on Friday, amid signals that the U.S. economy may be stabilizing after a recent bout of weakness.

NZD/USD hit 0.7507 on Friday, the pair's weakest level since April 15, before subsequently consolidating at 0.7543 by close of trade on Friday, down 0.96% for the day.

For the week, the pair fell 0.92% as the greenback was boosted by longer-term expectations for a U.S. rate rise.

U.S. economic data on Friday showed that activity in the manufacturing sector was stable in April, after slowing in the five previous months, while consumer sentiment improved to its highest level since January last month.

On Thursday, weekly claims data showed that the number of Americans filing for jobless benefits fell to a 15-year low of 262,000 last week, fuelling optimism that the U.S. economy has turned a corner after a recent soft patch.

Data published Wednesday showed that the U.S. economy grew just 0.2% in the three months to March, slowing from 2.2% in the final quarter of 2014. It was the slowest rate of growth in a year.

The disappointing data prompted investors to push back expectations on the timing of an initial rate hike by the Federal Reserve to later this year from midyear.

But in its rate statement on Wednesday the Fed said recent indications of a slowdown in growth were probably due to “transitory factors.”

Meanwhile, the Reserve Bank of New Zealand signaled the possibility of upcoming rate cuts following the conclusion of its policy-meeting earlier in the week.

The RBNZ held its benchmark interest rate at 3.50% in a widely expected move, but said it could lower borrowing costs in the future if demand weakens and wage and price-setting outcomes settle at levels lower than is consistent with the inflation target.

In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls report, for a fresh indication on the strength of the economic recovery. Market players are also looking ahead to New Zealand employment data due on Wednesday.

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

Monday, May 4

China is to release revised private sector data on manufacturing activity. The Asian nation is New Zealand's second-largest export partner

Later in the day, the U.S. is to publish figures on factory orders.

Tuesday, May 5

The U.S. is to release data on the trade balance and construction sector activity, while the Institute of Supply Management is to release a report on U.S. service sector activity.

Wednesday, May 6

New Zealand is to release its quarterly employment report, while China is to produce private sector activity on service sector growth.

The U.S. is to release its monthly ADP nonfarm payrolls report and later in the day Fed Chair Janet Yellen is to speak at an event in Washington DC.

Thursday, May 7

The U.S. is to publish the weekly report on initial jobless claims.

Friday, May 8

The U.S. is to round up the week with what will be the closely watched government nonfarm payrolls report.