Auckland Unlikely To See Alert Level Changes This Week, RBNZ Policy Decision Takes Focus

NZD/USD has traded on a heavier note at the start to the new week. The rate last operates at $0.6991, 13 pips lower on the day and in close proximity to its Nov 17 six-week low of $0.6980. Positioning ahead of this week's RBNZ monetary policy decision may be affecting price action.

• A fall through that level would shift bearish focus to $0.6930, which marks the base of a bull channel drawn off Aug 20 low. Bulls keep an eye on the 50-DMA/Nov 18 high/38.2% recovery of the Feb - Aug sell-off at $0.7052/53/57. A break above that area would open up Nov 15 high of $0.7081.
• On the data front, New Zealand's retail sales come out Tuesday, trade balance hits the wires Thursday, while ANZ Consumer Confidence Index is due Friday.
• Elsewhere, the main focus this week falls on the monetary policy decision from the RBNZ. Most analysts expect the Committee to raise the OCR by 25bp but many concede that a 50bp hike is on the table. The OIS strip prices a ~36% chance of such an outsized hike to the key policy rate.
• PM Ardern told TVNZ this morning that Auckland is unlikely to see any "significant shifts" in restrictions before moving out of lockdown and into the Covid-19 traffic light system. The decision on the move will be taken by the Cabinet next Monday and businesses should be allowed to reopen within a day or two from that date.