Weekly Outlook: 2014, May 25 - June 01

NZD/USD weekly outlook: May 26 - 30

The New Zealand dollar fell to a three-week low against its U.S. counterpart on Friday, amid indications that the U.S. economy is shaking off the effect of a weather-related slowdown over the winter.

NZD/USD hit 0.8531 on Friday, the pair’s lowest since April 29, before subsequently consolidating at 0.8553 by close of trade, down 0.15% for the day and 0.93% lower for the week.

The pair is likely to find support at 0.8531, the low from May 23 and resistance at 0.8587, the high from May 22.

The Commerce Department reported Friday that sales of new homes rose by a larger-than-expected 6.4% to 433,000 in April, after two months of decline.

Analysts had been expecting a figure of 425,000. March's number was revised up from 384,000 to 407,000.

The upbeat data underlined the view that the U.S. economy was regaining traction after being slowed by unusually cold temperatures during the winter months.

Data from the Commodities Futures Trading Commission released Friday showed that speculators decreased their bullish bets on the New Zealand dollar in the week ending May 20.

Net longs totaled 17,594 contracts as of last week, compared to net longs of 19,340 contracts in the previous week.

In the week ahead, U.S. markets will remain closed on Monday for the Memorial Day holiday. Revised data on U.S. first quarter growth and reports on U.S. consumer confidence will be in focus.

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

Monday, May 26

• New Zealand is to publish data on the trade balance, the difference in value between imports and exports.
• Markets in the U.S. will remain closed for the Memorial Day holiday

Tuesday, May 27

• The U.S. is to produce data on durable goods orders, house price inflation and consumer confidence.

Wednesday, May 28

• New Zealand is to release private sector data on business confidence.

Thursday, May 29

• The U.S. is to release revised data on first quarter GDP, as well as the weekly government report on initial jobless claims and data on pending home sales.

Friday, May 30

• New Zealand is to release data on building consents.
• The U.S. is to round up the week with a report on personal income and expenditure and revised data from the University of Michigan on consumer sentiment.

GBP/USD weekly outlook: May 26 - 30

The pound was lower against the broadly stronger dollar on Friday after U.S. housing data topped expectations, adding to optimism that the economic recovery in the U.S. is gaining traction.

GBP/USD ended Friday’s session at 1.6828, down 0.25% for the day.

Cable is likely to find support at 1.6770 and resistance at 1.6920, Wednesday’s high.

The dollar was boosted after the Commerce Department reported that sales of new homes rose by a larger-than-expected 6.4% to 433,000 in April, after two months of declines.

Analysts had been expecting a figure of 425,000. March's number was revised up from 384,000 to 407,000.

Elsewhere, sterling rose to its highest level in 17 months against the euro after weak German business sentiment data underlined expectations that the European Central Bank will ease monetary policy at its next meeting in June.

EUR/GBP touched lows of 0.8082, the lowest since December 2012 before pulling back to 0.8099 at the close, ending the week 0.69% lower.

The drop in the euro came after a report showed that the German Ifo business climate index declined to 110.4 in May; the lowest reading this year, from 111.2 in April, indicating that economic activity could slow in coming months.

The data came one day after a report showing that manufacturing activity in the euro zone expanded at the slowest rate in six months in May.

Recent comments by senior ECB officials have signaled that the bank is open to acting as soon as June to stop inflation in the currency bloc from falling too low.

On Thursday, ECB Governing Council member Jens Weidmann said the bank is prepared to take unconventional measures to counter the risks of low inflation in the euro zone.

Demand for the pound was underpinned after Wednesday’s minutes of the Bank of England’s May meeting indicated that some policymakers believe the decision on when to raise rates is "becoming more balanced," indicating that they are becoming more hawkish about the argument for hiking interest rates.

Sterling received an additional boost after data on Wednesday showing that U.K. retail sales jumped in April bolstered the outlook for the broader recovery.

Retail sales jumped 1.3% in April, the Office of National Statistics said, more than double forecasts for a 0.5% increase, driven by higher food sales over the Easter holiday.

In the coming week, markets in the U.K. will be closed for a public holiday on Monday, while U.S. markets will also be closed for the Memorial Day holiday. Investors will be looking ahead to revised data on U.S. first quarter growth, while the U.K. is not scheduled to release any major data.

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

Monday, May 26

• Markets in the U.K. are to remain closed for a public holiday, while U.S. markets will also be closed, for the Memorial Day holiday.

Tuesday, May 27

• The U.K. is to publish a private sector report on mortgage approvals.
• The U.S. is to produce data on durable goods orders, house price inflation and consumer confidence.

Wednesday, May 28

• The U.K. is to publish private sector data on retail sales.

Thursday, May 29

• The U.S. is to release revised data on first quarter GDP, as well as the weekly government report on initial jobless claims and data on pending home sales.

Friday, May 30

• The U.S. is to round up the week with a report on personal income and expenditure and revised data from the University of Michigan on consumer sentiment.

EUR/USD weekly outlook: May 26 - 30

The euro fell to three month lows against the broadly stronger dollar on Friday after data showing that German business sentiment deteriorated in May added to expectations for easing by the European Central Bank at its upcoming June meeting.

EUR/USD hit lows of 1.3616, the weakest since February 13 and settled at 1.3630, 0.18% lower for the day. For the week, the pair lost 0.60%.

The pair was likely to find support at 1.3560 and resistance at 1.3660.

The drop in the euro came after a report showed that the German Ifo business climate index declined to 110.4 in May; the lowest reading this year, from 111.2 in April, indicating that economic activity could slow in coming months.

The data came one day after a report showing that manufacturing activity in the euro zone expanded at the slowest rate in six months in May.

Recent comments by senior ECB officials have signaled that the bank is open to acting as soon as June to stop inflation in the currency bloc from falling too low.

On Thursday, ECB Governing Council member Jens Weidmann said the bank is prepared to take unconventional measures to counter the risks of low inflation in the euro zone.

The dollar was boosted after data on new home sales added to signs of a recovery in the housing market.

The Commerce Department reported that sales of new homes rose by a larger-than-expected 6.4% to 433,000 in April, after two months of decline. Analysts had been expecting a figure of 425,000. March's number was revised up from 384,000 to 407,000.

Elsewhere, the euro fell to 17 month lows against the pound, with EUR/GBP hitting 0.8082, the lowest since December 2012 before pulling back to 0.8099 at the close.

EUR/JPY ended Friday’s session at 139.02, not far from the three-and-a-half month trough of 138.13 struck on Wednesday.

In the coming week, U.S. markets are to remain closed for the Memorial Day holiday on Monday. Investors will be looking ahead to revised data on U.S. first quarter growth, while reports on U.S. consumer confidence will also be in focus.

In the euro zone, data on German consumer climate and retail sales will be closely watched.

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

Monday, May 26

• ECB President Mario Draghi is to speak at an event in Portugal; his comments will be closely watched.
• U.S. markets will also be closed for the Memorial Day holiday.

Tuesday, May 27

• ECB President Mario Draghi is to speak at an event in Portugal; his comments will be closely watched.
• The U.S. is to produce data on durable goods orders, house price inflation and consumer confidence.

Wednesday, May 28

• France is to release data on consumer spending, while Germany is to publish a report on unemployment change. Market research group Gfk is to publish a report on German consumer climate. The euro zone is to release data on M3 money supply and private loans.

Thursday, May 29

• The U.S. is to release revised data on first quarter GDP, as well as the weekly government report on initial jobless claims and data on pending home sales.

Friday, May 30

• In the euro zone, Germany is to publish a report on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
• The U.S. is to round up the week with a report on personal income and expenditure and revised data from the University of Michigan on consumer sentiment.

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