Kiwi Holds Steady After Orr Reaffirms Anti-Inflation Bias

Monday saw NZD/USD retreat, with liquidity thinned out by market holidays in a number of countries, including New Zealand. The rate came under pressure following the release of China's activity data, which showed an above-forecast contraction in retail sales and an unexpected bounce in the unemployment rate, with some analysts questioning the reliability of better than anticipated GDP figures amid intensifying headwinds from the outbreak of Omicron.

• RBNZ Gov Orr said that New Zealand's central bank has been "acting reasonably aggressively to tighten monetary conditions" and "provided strong forward guidance that we expect to be doing more rate rises over coming quarters." He spoke after the RBNZ raised the OCR by 50bp last week, the largest amount of tightening in 22 years.
• Orr conceded that the central bank is "not in a great place now "when it comes to fighting inflation and noted that "at the moment, the balance of risks (...) is very much weighted to constraining those inflation expectations in the medium term." He said that policymakers "must retain an anti-inflation bias in everything we do."
• Separately, FinMin Robertson told RNZ that he expected upcoming data to show an acceleration in consumer price growth. He refused to speculate on specific numbers, but warned that inflation has not peaked yet.
• New Zealand's PSI will hit the wires at the bottom of the hour, before focus turns to the much awaited quarterly CPI report, due Thursday.
• NZD/USD trades at $0.6734, only marginally on the day. Bulls need a clearance of Apr 13 high of $0.6902 before setting their sights on Apr 5 high of $0.7034. Bears would be pleased by a retreat under yesterday's low of $0.6715, followed by Feb 24 low of $0.6631.