Kiwi falls to 2-Month low as China market still struggling

The New Zealand dollar's recent weak spell endured on Monday, with the currency dropping to its lowest in almost two months on the back of new signs that New Zealand's second-largest export market is struggling.

Inflation data from China showed the CPI rising 1.6% year-on-year in December, coming in weaker than the 1.7% forecast by markets, and well below the government's target of around 3.0%.

The New Zealand dollar was down almost 4% last week, and continued its soft run on Monday, with the NZD/USD pair falling 0.40% to $0.6510, its weakest since November 17, from $0.6541 on Friday afternoon in New York.

New Zealand building approvals rose for the second month in a row in November, suggesting construction activity could be one of the key drivers to growth again in 2016. Consents rose a seasonally-adjusted 1.8% month-on-month to 2,831 in November, according to Statistics New Zealand, following a revised 5.4% increase in October.

With little on the local data calendar this week, the key catalyst for the New Zealand dollar is likely be developments in China.