"It's been a very, very subdued start to the week – the big headline's going to be tomorrow's CPI figure," says Alex Hill, head of corporate dealing at xe.com.
"In all of these markets at the moment, any hard CPI numbers are what people are focusing on," Hill says.
The market is expecting a flat inflation result for the December quarter, taking the annual rate to 1.8 per cent. That outcome would be below the Reserve Bank's forecast of 0.2 per cent for the quarter and 2 per cent for calendar 2018, but will be mainly due to a 40 per cent plunge in oil prices.
However, the outcome for the September quarter of 0.9 per cent, more than double market forecasts of about 0.4 per cent, illustrates the potential for surprise.
"It would only need to print positive for the kiwi to get a head of steam on," Hill says.
The Chinese data yesterday showed its annual economic growth dipped to 6.4 per cent in the December quarter, which met expectations but was the slowest yearly pace since 1990.
Ahead of the Davos forum, Harvard professor Kenneth Rogoff, who used to be chief economist at the International Monetary Fund, warned that China is in the grip of a dangerous downturn.
Rogoff said key policy instruments of the Communist Party are losing traction and the country has exhausted its credit-driven growth model.
"People have this stupefying belief that China is different from everywhere else and can grow to the moon," Rogoff told London's The Telegraph.
"China can't just keep creating credit. They are in a serious growth recession and the trade war is kicking them on the way down."
Hopes have been rising that the US and China will be able to settle their trade war but nothing concrete has happened yet.
Adding to the global gloom, the US government is entering an unprecedented 31st day of partial shutdown and Moody's Analytics has estimated it has taken a US$8.7 billion ($12.9b) bite out of the US economy, shaving 0.2 percentage points off first-quarter annualised growth.
Moody's says the impact will only worsen the longer the shutdown, caused by President Donald Trump to try to wrest US$5.7b out of Congress to build a wall on the Mexican border.
And the International Monetary Fund warned of the risks to the global economy from a prolonged trade war or a chaotic Brexit. It trimmed its 2019 global growth forecast to 3.5 per cent, down 0.2 from its last forecast in October.
The New Zealand dollar is trading at 94.23 Australian cents, up from 93.97, at 52.21 British pence from 52.18, at 59.18 euro cents from 59.14, 73.60 yen from 73.75 and 4.5750 Chinese yuan from 4.5690.
The two-year swap rate is trading at 1.9043 per cent from 1.87 and the 10-year swap rate is at 2.6025 per cent from 2.60.
