During the later part of January, the monsoon trough became active over the southwest Pacific and two depressions were spawned along it. The second depression, which later developed into cyclone Nancy, developed from a cloud cluster over the Coral Sea near 18.3°S 156.0°E on 26 January. From this position, the depression headed equatorward along a parabolically curved track. An upper level trough eventually amplified in the vicinity of the depression and set up good outflow channels for further development.
By 0001 UTC, 31 January, the depression had gained tropical cyclone characteristics near 15.0°S, 158.0°E. The convoluted nature of the upper level trough helped steer Nancy southwards. When it was located west of northeast New Caledonia, the cyclone veered southwest and followed a course towards Brisbane. Nancy reached peak intensity at 0300, 1 February near 24.7°S, 158.2°E with a maximum winds of 100 km/h and central pressure of 975 hPa.
On the 1 and 2 Febrary, Nancy 's progress just off the Queensland coast near Brisbane was slow and irregular. Heavy rain (up to 530 mm in 24 hours, 132 mm in three hours) occurred between the coast and coastal ranges south from Brisbane causing flash flooding in which four people were drowned.
On its trek southwards, Nancy gradually weakened and by 4 February it finally became an extratropical low. Surface reports and satellite data over the southern Tasman Sea demonstrated that Nancy' s structure still contained a significasnt low pressure centre for two days after this date. The remains of the former cyclone dissipated west of central New Zealand on 8 February.