Forex - NZD/USD weekly outlook: January 19 - 23

Investing.com - The New Zealand dollar declined against its U.S. counterpart on Friday, after data showing that U.S. consumer sentiment jumped to the highest level in 11 years in January overshadowed earlier U.S. industrial production and inflation data.

NZD/USD hit 0.7889 on Thursday, the pair's highest since December 2, before subsequently consolidating at 0.7795 by close of trade on Friday, down 0.37% for the day and 0.56% lower for the week.

The pair is likely to find support at 0.7695, the low from January 15, and resistance at 0.7889, the high from January 15.

In a preliminary report, the University of Michigan said Friday that its consumer sentiment index rose to 98.2 this month, the highest level since January 2004, from 93.6 in December, compared to expectations for a rise to 94.1.

A separate report showed that U.S. consumer price inflation fell 0.4% last month, in line with expectations and after a 0.3% decline in November.

Core CPI, which excludes food and energy, was flat in December, compared to expectations for a 0.1% rise, after a 0.1% uptick the previous month.

Data also showed that U.S. industrial production slipped 0.1% in December, confounding expectations for a 0.1% rise, after an increase of 1.3% in November.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.57% to 93.05 and notched up its fifth successive week of gains, supported by weakness in the euro.

The euro remained under pressure amid mounting expectations that the European Central Bank will embark on full blown quantitative easing as soon as its next policy meeting on January 22.

Elsewhere, NZD/CHF was up 2.19% to 0.6705 late Friday, having recovered from the lows of 0.5781 struck in the previous session.

The franc still ended the week with gains of almost 16% against the New Zealand dollar after the Swiss National Bank said Thursday that it would discontinue its minimum exchange rate of 1.20 per euro, while lowering interest rates further into negative territory.

In the week ahead, investors will be focusing on Thursday’s outcome of the ECB’s policy meeting and the subsequent press conference with central bank governor Mario Draghi.

Traders are also looking ahead to a raft of Chinese economic data later this week, including reports on fourth quarter gross domestic product, as well as data on industrial production and retail sales.

The Asian nation is New Zealand's second-largest trade partner.

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

Monday, January 19

U.S. markets will remain closed for the Martin Luther King Day holiday.

Tuesday, January 20

China is to release data on gross domestic product, the broadest indicator of economic activity and the leading indicator of economic growth. The country is also to report on fixed asset investment, industrial production and retail sales.

Later in the day, New Zealand is to release data on consumer price inflation.

Wednesday, January 21

The U.S. is to release data on building permits and housing starts.

Thursday, January 22

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

Friday, January 23

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

The U.S. is to round up the week with preliminary data on manufacturing activity and a private sector report on existing home sales.