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Kiwi remains range-bound despite US inflation concerns

NZD - New Zealand Dollar

The New Zealand dollar opens slightly softer this morning at 0.7206, down from its Friday close of 0.7216. With little to digest at home, the Kiwi took direction from offshore with the Kiwi staying decidedly range-bound throughout the week. Initially the Kiwi advanced as the Greenback's recent resurgence faltered in the face of rising inflation concerns spurred on by a potentially overzealous stimulus package. With the proposed package some 9% of GDP on top of the 4% of GDP proposed before Christmas there are concerns that inflation will take off. Despite the concerns, the 1-year inflation expectations figure failed to meet expectations and only rose to 1.21%, albeit still almost a yearly high for the report. The Kiwi then spent the rest of the week consolidating around the 0.7220 level despite the Aussie continuing its run, although the broader market was sluggish in general due to Chinese New Year celebrations and a looming public holiday today in the US, Presidents' Day. Moving into a new week the Kiwi is set to enjoy a very quiet domestic docket, although movements will be tempered in light of the Auckland three-day lockdown.

Key Movers

The US dollar again took centre stage last week with the Greenback's behaviour dictating broader market movements. Spurred on first by rising treasury yields and lower than expected inflation levels, the Greenback initially consolidated against a basket of currencies but ultimately weakened as Federal Reserve head Powell and later US Treasury Secretary Yellen both displayed a dovish tone. The Greenback was also sold-off throughout the week as inflation concerns crept into the stimulus conversation. Nevertheless, the US dollar opens this morning at 90.45 on the US DXY and is up 0.16 against the Japanese yen and 0.07% against the Swiss franc.

Across the Atlantic, the British pound turned out to be one of the better performers for the week after Q4 GDP rose by double market expectations at 1% q/q. Helped along by a softer Greenback and reports that the UK is starting to make headway in the infection rate, the Sterling rose an impressive 0.8% for the week and opens this morning at 1.3845.

Expected Ranges

NZD/AUD: 0.9210 - 0.9349 ▼

NZD/CAD: 0.9086 - 0.9223 ▼

NZD/EUR: 0.5895 - 0.5984 ▲

GBP/NZD: 1.9036 - 1.9323 ▲

NZD/USD: 0.7160 - 0.7269 ▲