OUTLOOK

CURRENCY: A quiet start with a Japanese holiday today may disguise the busy week to come. Plenty of local NZ data is likely to deliver relatively wide ranges while USD fortunes rest of another round of housing data.

RATES: Expect the local rates to open broadly unchanged following a quiet London session, and a fairly flat AU market.

Review

CURRENCY: Failure at breaking new topside ground and renewed concerns around Greece were enough to deliver the NZD back into the 0.70USD zone. A renewed USD fought hard to make gains across the board.

GLOBAL MARKETS: Easing US yields pare earlier losses. Lower than expected UK borrowing keep UK yields lower. Renewed Greece fears weigh on equities. Stronger USD pushes commodity prices lower.

Key Themes and Views

* debt crisis warning. Speaking to the country's biggest union, GSEE, which has staged protests and strikes against his austerity plan, Greek PM Papandreou warned his country was one step from being unable to borrow. As opposition within Germany mounts ahead of the March 25-26 EU summit in Brussels, Chancellor Merkel has remained non-committal on whether to back EU aid.

* intriduction of the "living will." Congress is considering a resolution mechanism for financial firms that are so large or interconnected to other institutions that their failure could damage the financial system. This would include these firms having "living wills" which would outline plans for how they would be unwound when they became insolvent. This follows criticism from Congress of the Fed's purchase of $29 billion of securities in March 2008 to facilitate the merger of Bear Stearns with JPMorgan Chase & Co. Bernanke has noted that bailouts of big financial companies are "unconscionable" and must be ended as part of a regulatory overhaul efforts. Rather than allow the Federal Deposit Insurance Corp to liquidate large firms (with FOMC and Treasury approval), the Fed is revamping its approach to supervision, using horizontal reviews targeting risks across the financial system.

Overnight Comments/Events

* Annual Canadian core CPI inflation increases to 2.1 percent in February. This was the first time since December 2008 core was above 2 percent. Higher cost for auto insurance and accommodation costs during the Vancouver Olympics boosted inflation.

* China warns US against posing sanctions over value of Yuan. Pressure on China to strengthen the Yuan "does no good to anyone" China's Commerce Minister Chen Deming said at the China Development Forum in Beijing.

* The Reserve Bank of India yesterday increased the benchmark reverse repurchase rate to 5 percent from 4.75 percent, the first rise in two years. Containing inflation has become "imperative."

NZD: Building anticipation While a quiet start to the week is likely the finish may be a little more active. Local NZ Q4 data (Current account and GDP) should enliven markets despite the reality they are delayed. For today expect a narrow range to play out.

Expected Range: 0.7050 - 0.7120

NZDAUD: Turned away Having failed to break through 0.7789 this cross has eased slightly. It will take another week before many realise that another interest rate rise is coming in Australia next month and begin to position themselves for it.

Expected range: 0.7703 - 0.7767

NZDEUR: Asking too much Again Greece is the word to start this week. It needs to solve the funding problems before the EUR will see the light. Tests higher for this cross will run into resistance around 0.5263 (1.90EURNZD) as offshore sellers of NZD look for a move back towards 0.5191.

Expected range: 0.5191 - 0.5263

NZDJPY: Similar story At this point asking the cross to move above 65JPY is too much. It will take time for this to occur and today with the Japanese market on holiday it will lack momentum and may drift back below 64JPY.

Expected range: 63.85 - 65.00

NZDGBP: UK budget this week The first piece of the puzzle on the UK front falls into place this week. Just how much worse the news can get is at this point unknown. As are topside resistance levels for this cross as there appear not to be any.

Expected range: 0.4693 - 0.4750