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The New Zealand dollar was little changed before testimony from Federal Reserve chair Janet Yellen that may provide clues to the timing of interest rate rises in the world's biggest economy and ahead of the release of minutes of the last Reserve Bank of Australia meeting.
The kiwi traded at 88.03 US cents at 8am in Wellington, edging back from 88.14 cents at 5pm local time yesterday. The trade-weighted index was at 81.80, down from 81.92 late yesterday, and has held in a trading range of about 30 points for more than a week.
Yellen has previously indicated the Fed isn't in any rush to start raising interest rates from near zero and traders say she may reiterate that view in appearances this week even amid signs of improvement in US employment. The Reserve Bank of Australia has kept its cash rate at 2.5 percent, saying it sees no need to begin tightening policy any time soon, in contrast to New Zealand's central bank, which is expected to hike the official cash rate to 3.5 percent this month as inflation accelerates.
"Investors seem to be bracing for the main events later on, in particular Fed Chair Yellen's speaking engagements in front of US lawmakers, which kick off tonight," said Raiko Shareef, currency strategist at Bank of New Zealand. "We're on the lookout for any acknowledgement of a faster-than-expected improvement in the labour market, but we're not holding our breath."
In New Zealand, second-quarter inflation figures due on Wednesday are expected to show the consumer price index rose to 0.4 percent in the second quarter for an annual pace of 1.8 percent, according to a Reuters survey. That's closer to the mid-point of the 1 percent-to-3 percent range that the Reserve Bank targets and would keep intact expectations that governor Graeme Wheeler will raise the official cash rate to 3.5 percent this month.
The local currency traded at 64.60 euro cents, down from 64.78 cents late yesterday. It traded at 51.50 British pence, little changed from yesterday, and slipped to 93.63 Australian cents from 93.79 cents. It barely budged at 89.36 yen.