The kiwi dollar edged 0.1% lower to $0.6302 after easing 0.4% last week. Support lies around $0.6270 while resistance is around $0.6389.
The near-term direction for assets may be determined by U.S. consumer prices data on Tuesday, with much resting on whether inflation continued to slow in January. Median forecasts are for headline and core consumer prices to rise 0.4% for the month. Risks could be to the upside given that a re-analysis of seasonal factors released last week saw upward revisions to CPI in December and November.
"AUD/USD's sharpest movement of the week could well occur in response to the US inflation report on Tuesday night," said Sean Callow, a currency strategist at Westpac. "Any deviation from the median forecast seems likely to spark significant US dollar movement." Rodrigo Catril, senior FX strategist at NAB, said the Aussie dollar is showing resilience amid cross winds from rates and risk sentiment, supported by a hawkish RBA and China's improving economic activity.
He expects RBA governor Philip Lowe to reinforce the bank's
hawkish stance at parliamentary hearings this week.
The central bank surprised markets last week by signalling at least two more rate hikes after hiking the cash rate to a fresh decade high of 3.35%. That quashed any talk of a pause and led markets to price in a terminal rate of 4.2%, sharply higher than the 3.75% before the policy meeting. Australian bond markets have taken a beating, with yields on three-year paper climbing another 8 basis points to 3.466% on Monday, bringing the total increase to a whopping 40 bps in just one week.
Ten-year yields were up 9 basis points at
3.801%.
(Reporting by Stella Qiu; Editing by Edwina Gibbs)
