By Dan Bell

The NZD/USD opens this morning around 0.84 after trading in a tight range again overnight.

Global markets have had a mildly positive evening with most US stocks trading in positive territory.

Australia CPI came out weaker than expected yesterday at 2.2% pa. This is at the bottom of the RBA’s 2-3% inflation range and has increased the chance of a cut at the RBA’s Feb meeting to 40%.

One of the most accurate RBA commentators Terry McCrann said the RBA might be forced to cut rates to offset upward pressures on the currency and continued weakness in the labour market.

The RBA’s next meeting is on Tuesday 4th Feb. We expect the NZD/AUD cross rate to trend higher over the course of the year as interest rate differentials begin to favour the NZD over the AUD.

The IMF’s chief economist played down concerns that easy monetary policies in advanced economies risk sparking a "currency war", saying there had not been a major surge of capital into emerging nations.

Olivier Blanchard said at a news conference. "Countries have to take the right measures to get their own economies back to health ... (and) to the extent we think the policies are appropriate, then the implications in terms of exchange rates are also appropriate."

The NZD opens at current mid rates against the major crosses: 0.7980 AUD, 0.6317 EUR, 0.5309 GBP, 74.50 JPY, 0.84 CAD.

On the local front we get NZ Business PMI this morning and Credit Card Spending data this afternoon. Offshore we get HSBC Chinese flash manufacturing PMI at 2:45pm NZT.

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Dan Bell is the senior currency strategist at HiFX in Auckland. You can contact him here