Underperforming

The kiwi lags all its G10 peers in early trade this week, despite an uptick in the broader risk appetite linked to the reassessment of risks from the Omicron coronavirus variant. Some tentative optimistic signals pointing to the limited severity of symptoms caused by the new variant, particularly among the vaccinated, have provided some reprieve. The NZD has been unfazed despite little in the way of local headline catalysts, but it is worth noting that the descending 50-DMA of NZD/USD has crossed below the 100-DMA.

• NZD/USD last trades at $0.6758, 15 pips lower on the day. Downside focus falls on Dec 3 low of $0.6741 and a break here would open up Nov 2, 2020 low of $0.6589. Conversely, a bounce above Dec 1 high of $0.6868 would please bulls.
• New Zealand's volume of construction work shrank 8.6% Q/Q in Q3 after growing 2.0% in Q2. Consensus was looking for a 13.0% decline in Q3, but the kiwi didn't seem to pay much attention to a better-than-expected data print.
• Focus on the data front turns to m'fing activity (Thursday) as well as BusinessNZ M'fing PMI & card spending (Friday).
• Elsewhere, RBNZ Dep Gov Bascand will deliver a speech titled "Reflections of a Central Banker," while Asst Gov Hawkesby will speak to KangaNews New Zealand Debt Capital Market Summit tomorrow.
• PM Ardern defended the gov't's Covid-19 policies and noted that the new traffic light system has received positive feedback so far.