(Bloomberg) -- A string of positive New Zealand data has got investors reassessing the odds of negative interest rates. Inflation figures due this week may help to clarify the picture.

The report may be key for the New Zealand dollar, which has been consolidating against the greenback since mid-September. Depending on the print, the kiwi could breach its 100-day moving average to drop toward 64 U.S. cents or head higher to test resistance around 68 cents.

New Zealand’s currency has been caught in a tug-of-war as traders try to get a handle on when and if the central bank will deploy sub-zero rates to shore up growth. While policy makers insist the tool remains an option, there’s been some skepticism that the rhetoric is merely an attempt to keep the currency’s gains in check.

The kiwi has been confined within the 65 to 68 cent range since reaching a 17-month high of 67.98 cents on Sept. 18. It traded around 66 cents on Friday.

“If anything, the market is getting cold feet about rate cuts following a run of strong data, including the REINZ housing market data,” said Jason Wong, a currency strategist at Bank of New Zealand in Wellington.

Manufacturing, retail-card spending and house sales have all improved, giving credence to the argument that the economy is regaining some momentum. That has helped drive down the probability of the official cash rate falling to -0.25% by April to 28% from 40% on Oct. 8.

Third-quarter inflation data due Friday may give traders a better steer. Economists predict that prices climbed 1.7% on year, versus a 1.5% increase in the previous three months. A better-than-expected reading would cool easing bets and bolster the currency.

The Reserve Bank of New Zealand is aiming to get inflation in the middle of a 1%-3% band. In August, it forecast annual price gains would drop as low as 0.3% in late 2021.

With the election risk now out of the way, investors will be watching to see if the upcoming inflation print also helps to clarify the picture.

Below are the key Asian economic data and events due this week:

  • Monday, Oct. 19: China 3Q GDP, retail sales, industrial production and fixed assets ex-rural, Japan trade balance, Philippines BoP overall
  • Tuesday, Oct. 20: RBA minutes and Assistant Governor Kent speaks, China 1-year and 5-year loan prime rate
  • Wednesday, Oct. 21: New Zealand credit card spending, South Korea 20-day exports/imports and PPI, Malaysia CPI
  • Thursday, Oct. 22: RBA’s Debelle speaks, Australia 3Q business confidence, Philippine budget balance
  • Friday, Oct. 23: New Zealand 3Q CPI, Japan CPI and PMIs, Singapore CPI

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