Kiwi Holds Steady Amid Omicron Outbreak

There are no signs of any notable kiwi weakness after New Zealand tighten Covid-19 response measures over the weekend. Liquidity may be limited owing to a regional holiday in Wellington and Manawatu-Whanganui.

• NZD/USD stabilises after a sharp sell-off into the end of last week. The pair last sits at $0.6715, little changed on the day, with bears looking for a retreat past the $0.6703/02 area, which limited losses in Dec 2021. Below there opens Nov 2 low of $0.6589. Conversely, a clearance of Jan 19 high of $0.6812 would bring Jan 13 high of $0.6891 into view.
• The whole of New Zealand has moved to the "red" setting of the traffic light Covid-19 response system after an outbreak of the Omicron variant. The announcement came with a warning that "everybody should plan to be in red for some weeks." Covid-19 Response Min Hipkins noted that he expects that "large numbers of people" will get infected. Elsewhere, FinMin Robertson suggested that should daily cases reach 25,000, there could be 350,000 workers a day self-isolating. Robertson asked businesses to prepare for labour shortages and supply disruptions, pledging government aid for affected companies.
• Local data highlights this week include trade balance & credit card spending (Wednesday) as well as CPI (Thursday) & ANZ Consumer Confidence (Friday).