• The NZD/USD weekly forecast is bearish amid a stronger Greenback.
• NZ Gross domestic product grew 2.8% in the second quarter after rising 1.4% in the previous quarter.
• The US retail sales for August were forecast to decline for the second consecutive month on Thursday, but the upbeat figures turned the upside-down of the market.

The weekly forecast for the NZD/USD pair is bullish as the net negative change for the week is 90 pips. Moving into the next week, the FOMC press conference is the key market mover.

The NZD/USD pair ended the week in red despite some conflicting US economic data during the week. The pair started the week at 0.7107, marked the weekly highs at 0.7150 on Tuesday. After that, however, the price saw a dip to the weekly lows of 0.7025 on Friday. The pair found a mid-week bearish reversal on Wednesday.

NZ Gross domestic product grew 2.8% in the second quarter after rising 1.4% in the previous quarter. Growth was driven by a 2.8% q/q rise in the services industry, accounting for about two-thirds of the NZ economy, along with a 5.5% q/q increase in agriculture and a 1.3% rise in goods production.

According to the data, the economy is steadily climbing, and its contraction in the third quarter will be marginal. Furthermore, it is confident that the RBNZ will raise interest rates from the 0.25% emergency level next month.

The only question is whether this will be a 25 or 50 basis point rate hike. Although the 50 bp rate hike seems justified given the current Covid outbreak’s uncertainty, the interest rate market decided to raise prices by 35bp based on the GDP data at the October 6th meeting.

As the US consumer price rise slowed in August, the Federal Reserve found a reason to postpone reducing bond purchases. As a result, after the consumer price index was released on Tuesday, the USD/JPY fell to a weekly low on Wednesday.

The US retail sales for August were forecast to decline for the second consecutive month on Thursday, but the upbeat figures turned the upside down of the market. Michigan’s consumer sentiment dropped to its lowest level in ten years within a month. On the other hand, consumers enjoyed the busiest month since January despite limited automobile sales. Friday also marked the second consecutive day of winning streaks for the Dollar Index.

Government bond yields also increased slightly. As of Friday, the yield on the 10-year note rose 3 basis points to 1.370% from 1.340%, following Tuesday’s rise in consumer prices of 1.279%.

What’s Next For NZD/USD Weekly Forecast?

The week’s events will conclude on Wednesday with a meeting of the US Federal Reserve. However, the markets will remain calm until then.

US Treasury yields will rise if the Fed announces its tapering plan. How much the tapering will depend on how and when it should be made. The DXY should reach 93.75 easily. The yield on 10-year bonds could rise to 1.50%.