The New Zealand dollar rose against the greenback in early last weeks trading session but pared off gains and ended low by the closing of the week.
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.
Initial bias this week remains bearish as 21 is crossing 55 EMA to the downside on 4 hours chart. Also SSRC is signalling a continuation of bearish momentum and am expecting further decline to 0.7420 support as long as 0.7742 resistance holds. A convincing break of this 0.7420 low will bring further fall to 0.7190 support for a re-test.
In the week ahead, investors will be focusing on Friday’s U.S. Non-farm 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.