Forex - NZD/USD weekly outlook: 10-14 October 2011

Forex News - The New Zealand dollar ended the week higher against its U.S. counterpart on Friday, as market sentiment was lifted after the announcement of new European measures to counter the debt crisis and upbeat U.S. nonfarm payrolls data.

NZD/USD hit 0.7796 on Friday, the pair's highest since September 29; the pair subsequently consolidated at 0.7701, rising 1.17% over the week.

The pair is likely to find support at 0.7467, the low of October 4 and resistance at 0.7831, the high of September 29.

The kiwi rose to a six-day high on Friday, as risk sentiment strengthened after the U.S. Department of Labor said nonfarm payrolls rose by 103,000 in September, far more than the expected 53,000 gain, while payrolls for the previous two months were revised up by a total of 99,000.

But the New Zealand dollar turned lower the greenback, trimming some of the week's gains after Fitch ratings agency downgraded its rating for Italy to A+ from AA-, and cut Spain’s rating to AA- from AA+, sparking fresh concerns over the debt crisis in the euro zone.

The kiwi fell to a seven-month low on Tuesday, as demand for riskier assets was dented after European finance ministers postponed a decision on Greece's next bailout tranche until mid-November.

But the New Zealand currency bounced back after the International Monetary Fund said on Wednesday it was considering buying Italian and Spanish bonds, and after outgoing European Central Bank president Jean-Claude Trichet said on Thursday that the central bank was to launch operations to extend liquidity to European lenders.

The ECB also left its interest rate unchanged at 1.5%.

In the coming week, developments in the euro zone look likely to remain in the spotlight. Meanwhile, investors will be looking towards Friday’s U.S. data on retail sales to gauge the strength of the U.S. economic recovery.

New Zealand data on manufacturing activity will also be in focus.

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

Monday, October 10

In the U.S., debt markets will remain closed for the Columbus Day holiday, while stock markets will be open as usual.

Tuesday, October 11

The U.S. is to publish data on economic optimism.

Wednesday, October 12

New Zealand is to release data on food price inflation and manufacturing activity.

The Federal Reserve is to publish the minutes of its most recent policy-setting meeting.

Thursday, October 13

The U.S. is to release its weekly government report on initial jobless claims, as well as data on crude oil stockpiles, the federal budget balance and the trade balance.

Friday, October 14

The U.S. is to round up the week with official data on retail sales, the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.

The U.S. is also to publish official data on import prices and business inventories. In addition, the University of Michigan is to publish preliminary data on consumer sentiment and inflation expectations.

Also Friday, the G20 Group is to hold the first day of a two-day summit meeting.