NZD/USD rangebound in 0.6750 area after earlier printing fresh annual low at 0.6740

• NZD/USD has seen a subdued start to the week and trades just off annual lows in the 0.6750 region.
• In the absence of any important New Zealand economic events, the pair will this week be driven by USD flows.

NZD/USD has seen rangebound trading conditions thus far on Monday, with the pair for the most part sticking within tight 0.6740-0.6760 ranges over the course of the session so far. The pair did marginally squeeze out a fresh annual low at 0.67407 to just pip out last Friday’s low. At current levels just above 0.6750, the kiwi is trading very close to its weakest versus the US dollar since November 2020. The pair is currently down more than 6.0% from its early November highs close to 0.7200.

NZD/USD’s subdued price action at the start of the week is not overly surprising given the absence of any key New Zealand of US economic events on Monday and the proximity of important data releases later in the week. The most interesting US data will be October JOLTs job opening on Wednesday, weekly jobless claims on Thursday and November Consumer Price Inflation and preliminary December University of Michigan Consumer Sentiment data on Friday.

Whilst CPI will garner the most interest given the Fed’s growing concern about a more persistent inflation overshoot, the weekly jobless numbers and December Consumer Sentiment data will be closely eyed to see whether the recent rise in US Covid-19 infections is weighing on the economy yet. There are no notable economic events in New Zealand this week, meaning the NZD/USD price action is likely to be driven primarily by USD flows, risk appetite and movements in commodity prices.