The NZD has not participated in the recent FX bounce against the USD and may continue to underperform as the RBNZ publishes its Q2 inflation expectations on Tuesday.
These data will have a bearing on the June policy decision, where a 25bp rate cut is expected, given that underlying inflation is significantly below the RBNZ's target and with widespread weakness in wages.
"We do not formally forecast inflation expectations, but think continued low actual inflation is likely to feed back into expectations", says Barclays.
Recent retail sales strength counts against a cut, but the expectations data are more important, given that the RBNZ outlined a scenario in the March Monetary Policy Statement where it could cut 50bp on a material drop in expectations.
House prices are likely to be less of an influence on monetary policy now that the RBNZ has announced new macro-prudential measures aimed at cooling the Auckland housing market.
