The New Zealand dollar stuck to a tight range in thin trading with Japan on holiday but traders expect the market will pick up as US data rolls out and the Federal Reserve meets this week.
The Kiwi dollar traded at US70.77c at 5pm from US70.79c at 8am and US70.83c in New York Friday. The trade-weighted index was at 73.51 from 73.52 Friday.
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"It's pretty sparse out there today, in particular with the Japanese holiday. That's taken out a good part of the liquidity," said Ross Weston, a senior trader at Kiwibank.
He said the kiwi had little reaction to muted domestic business confidence data and news that China's official manufacturing purchasing managers' index inched down to 51.4 in April from 51.5 in March.
Looking ahead, however, Weston said investors would be watching for the US PCE index, the Federal Reserve's preferred measure for inflation. The report is due later in the global trading day and if the core measure was about 2 per cent the Fed was likely to project more hikes this year.
The Fed is widely expected to keep rates on hold this week but the key will be the forecasts for the remainder of the year. Many economists are now expecting four more rate hikes this year, according to MarketWatch and any confirmation of that will likely add to recent US dollar strength as it will further underpin rising US bond yields.
Weston said US jobs data late this week would also be closely watched.
Domestically, investors will be keeping an eye on the GlobalDairyTrade auction with Kiwibank projecting a slight lift in dairy prices and on New Zealand jobs data on Wednesday for any signs of wage inflation.
The kiwi remained firm against the British pound after the pound tumbled on weak economic growth data late last week and news that Britain's interior minister had resigned early today.
The Kiwi dollar traded at 51.35 British pence from 51.48p in New York on Friday and 50.71p in Asia at the end of last week.
The kiwi traded at 58.36 euro cents from 58.44 euro cents in New York and at 77.24 yen from 77.22 yen on Friday in New York and traded at 4.4821 yuan from 4.4859 yuan. It was at A93.51c from A93.49c.
New Zealand's two-year swap rate fell 2 basis points to 2.26 per cent and 10-year swaps fell 4 basis points to 3.20 per cent.