The New Zealand dollar may continue to rise this week after Greece's New Democracy party won enough seats to form a majority government and on speculation the Federal Reserve will take further steps to stoke the US economy, underpinning global growth.
The kiwi recently traded at 79.07 US cents, up from 78.88 cents at 8am. That's right in the middle of this week's trading range of 77.50 cents to 81.60 cents, according to a poll of five analysts in a BusinessDesk survey. Of the analysts surveyed, four said the kiwi will finish the week higher, one unchanged.
Greece's largest pro-bailout parties, New Democracy and Pasok have secured 163 out of the 300-seats, according to the official projection by the Interior Ministry in Athens based on 63 per cent of the vote. If the two parties agree to form a coalition the indebted nation is likely to stay in the euro-zone.
"The New Zealand dollar rallied moderately following the result - we are now waiting for the final outcome of the government," said Imre Speizer, market strategist at Westpac Banking Corp.
The Group of 20 leaders will meet in Mexico on Monday for a two day summit, with
Europe's financial crisis and its risk to the global economy likely to be the main focus.
German Chancellor Angela Merkel is under pressure to relax Greece's austerity requirements provided the new government stands by the EU-led bailout program. G20 leaders are also expected boost the 430 billion euro firewall announced in April by the International Monetary Fund.
Euro-zone finance ministers will meet during the week ahead of Friday's meeting of German, French, Italian and Spanish leaders in Rome.
Elections in France on Sunday confirmed the Socialist party gained an absolute parliamentary majority for the first time since 1993.
In the US, the Federal Reserve Open Market Committee's policy statement will be released on Wednesday, following a two-day meeting. The statement is expected to provide fresh details of efforts to pump up the pace of recovery in the world's largest economy, after a string of weaker-than-expected data.
"On Friday we saw the market become increasingly focused on a potential Q3 out of the US rather than Europe," said Stuart Ive, currency strategist at HiFX.
"As the kiwi edges into this week it's likely to rise ahead of the Fed meeting - if they fail to deliver Q3 we will see a sharp movement in the kiwi's downside."
The Federal Reserve Open Market Committee has previously pledged to keep interest rates low until at least the end of 2014.
US housing statistics are released on Tuesday, followed by jobless claims on Thursday.
Australia, New Zealand's largest export market, will release the minutes from its central bank meeting on Tuesday. Earlier this month the Reserve Bank cut its target cash rate by 25 basis points to 3.5 per cent in the face of deteriorating global sentiment.
The HSBC Flash Manufacturing Index, the unofficial reading of China's performance manufacturing index is out on Thursday.
In New Zealand, consumer confidence figures out this morning fell 2.5 per cent to 99.9 in the June quarter, eroding gains in the first three months of the year. Respondents were more upbeat about their current situation, with the present conditions index up 3 points to 101.5, though the expected conditions index sank 6.2 points to 98.7, its lowest level since mid-2008. A reading below 100 shows respondents are net negative.
The BNZ-Business NZ performance service index also released this morning edged up slightly in May on 56.8 points from 56.7 in April. It's sister survey the performance manufacturing index released on Friday rose 7.5 points last month, to 55.7 points. That's the fastest clip for the month since May 2006.
The March quarter's balance of payments and international investment position is out on Wednesday, followed by gross domestic product on Thursday and International Travel and Migration for May by Statistics New Zealand on Friday.
GDP grew at 0.5 per cent in the first three month of the year, based on a Reuters survey of 13 economists. That would continue the mild pick-up in growth after GDP rose 0.2 per cent and 0.3 per cent respectively in the final two quarters of 2011.
"If anything there is a risk that it might be higher," Speizer said. "That would be another positive for the kiwi - a good piece of data is likely to push us up to 80.50 cents."
The GlobalDairyTrade auction will be held on Wednesday morning, while ANZ's job advertisements are released on Friday.