Forex - NZD/USD weekly outlook: May 16-20

Investing.com – Last week saw the New Zealand dollar fall to a one-week low against its U.S. counterpart on Friday, as weaker commodity prices and mounting fears over a potential default for Greece’s debt weighed on risk sentiment.

NZD/USD hit 0.7834 on Friday, the pair's lowest since May 6; the pair subsequently consolidated at 0.7869 by close of trade, slumping 1% over the week. 

The pair was likely to find short-term support at 0.7813, the low of May 5 and resistance at 0.7989, Thursday’s high.

The kiwi fell sharply on Friday as growing speculation that Greece will be forced to restructure its debt dampened risk appetite and boosted the greenback.

Meanwhile, the kiwi came under pressure on Wednesday after Reserve Bank of New Zealand Governor Alan Bollard said that the country’s currency had been pushed to “undesirably high” levels due to rising commodity prices

''We think that it would be better for the New Zealand economy if the NZ dollar was not so high,'' Mr. Bollard said while delivering the central bank’s financial stability report in front of a parliamentary hearing.

Also Wednesday, weaker-than-expected industrial output data from China sparked concern that demand for commodities was cooling. New Zealand is China’s second largest trading partner. 

Next week, the U.S. is to publish government data on housing and employment while the Federal Reserve is to publish the minutes of its most recent policy meeting. Meanwhile, New Zealand’s government is to publish details of the country’s annual budget.

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

Monday, May 16

The Chairman of the Federal Reserve Ben Bernanke is to speak; his comments will be closely watched for any clues to the possible future direction of monetary policy. The U.S. is also to publish government data on the balance of domestic and foreign investment as well as data on manufacturing activity in New York state.

Tuesday, May 17

New Zealand is to publish official data on producer price inflation, a leading indicator of consumer inflation.

Meanwhile, the U.S. is to publish official data on building permits, an excellent gauge of future construction activity as well as data on housing starts, a leading indicator of economic health. The country is also to publish government reports on the capacity utilization rate and industrial production.

Wednesday, May 18

The Federal Reserve is to publish the minutes of its most recent policy meeting. The minutes give in-depth insights into the economic conditions that influenced the decision on where to set interest rates. The U.S. is also to publish government data on crude oil stockpiles.

Thursday, May 19

New Zealand’s government is to publish details of the country’s annual budget. This document outlines the government's budget for the year, including expected spending and income levels, borrowing levels, financial objectives, and planned investments

Elsewhere, the U.S. is to publish its weekly report on initial jobless claims as well as industry data on existing home sales and official data on manufacturing activity in Philadelphia.

Friday, May 20

New Zealand is to round up the week with a report on credit card spending, which is directly correlated with consumer spending and confidence.