Kiwi Kept In Check Despite Risk-On Impulse

NZD/USD traded sideways Monday, despite a 50bp cut to China's RRR and a waning sense of concern over the Omicron coronavirus variant. These risk-positive developments may have been countered by an FT interview with outgoing RBNZ Dep Gov Bascand, who suggested that low net migration could tame housing prices, which might affect the Reserve Bank's forecast for policy tightening. NZD/USD finished the day only marginally above neutral levels.

• Messrs Bascand and Hawkesby provided a fresh round of central bank speak this morning, but there has been no follow through in NZD price action. Mr Bascand told a financial services conference that inflation is likely to stay above 4% "over the next year." At a separate event, Mr Hawkesby warned that the labour market "can get tighter before it gets looser." Both reiterated that the Reserve Bank will keep gradually reducing stimulus.
• Elsewhere, New Zealand joined the U.S.-led diplomatic boycott of the Beijing Winter Olympics in February. No Kiwi officials will attend the event, which may further complicate Sino-NZ relations.
• The latest monetary policy decision from the RBA & Chinese trade data take focus today, in the absence of domestic data releases.
• Later in the week, focus turns to New Zealand's m'fing activity (Thursday) as well as BusinessNZ M'fing PMI & card spending (Friday).
• NZD/USD last trades -11 pips at $0.6742. Bears look for a fall through yesterday's trough at $0.6740, before targeting Nov 2 low of $0.6589. Conversely, a jump above Dec 1 high of $0.6868 would give bulls some reprieve.