Robertson Sees No Potential For Stagflation, OECD Advise NZ To Tighten Fiscal Policy

NZD/USD charted its first bullish candlestick in seven days on Monday, as last week's risk aversion faded away, with improving sentiment lending support to riskier currencies. The rate struggled to break out of the prior day's range, topping out virtually at Jan 28 high.

• RNZ reported that Cabinet ministers will finalise, but not announce, the updated timeline for reopening borders today. The initial plan was pushed back in response to the outbreak of the Omicron variant.
• Speaking after the release of the OECD's Economic Survey of New Zealand, FinMin Robertson said that the government doesn't see potential for stagflation and consumer price growth is expected to come off its peak in the next 12-18 months.
• The OECD recommended that New Zealand should tighten fiscal policy to reduce the stabilisation burden on the RBNZ, as evidence that the economy is overheating keeps building.
• CoreLogic House Price Index and quarterly jobs market data will hit the wires tomorrow, providing fresh data signals feeding into the ongoing debate on the state of New Zealand's economy.
• Meanwhile, the kiwi dollar has been unfazed by a contraction in monthly trade deficit recorded in December. That being said, data released this morning showed that the annual deficit of NZ$6.784bn was widest since May 2006.
• NZD/USD last changes hands at $0.6577, barely changed on the day. A break above Jan 19 high of $0.6812 is needed to give bulls some reprieve. On the flip side, losses past Jan 28 low of $0.6530 would expose Sep 24, 2020/Aug 20, 2020 lows of $0.6512/0.6489.