Kiwi trades in tight range ahead of CPI data
The New Zealand dollar was confined in a narrow range ahead of the release of the December quarter consumer price index (CPI) later this morning.
The kiwi was at 84.10 US cents at 8am, up from 83.93 US cents at 5pm yesterday.
"It traded in a 40-point range at best overnight," Mike Jones, from the sales team at BNZ, says.
There was potential for the CPI data to set the market alight, particularly if inflation was low, he told BusinessDesk.
The market is expecting a 0.1 percent rise in the CPI, taking the annual rate to 1.2 percent.
The Reserve Bank is also expecting a 0.1 percent rise in the quarter and inflation is expected to remain at the bottom of its 1 precent to 3 percent target band during the coming year, according to economists.
Imre Speizer, senior market strategist at Westpac, says a small negative number could have negative psychological connotations, which would undermine the local currency.
The kiwi rose on Wednesday after disappointing employment data undermined the Australian dollar, increasing the case for an interest rate cut in Australia.
In New Zealand, the central bank is expected to keep the official cash rate unchanged until the end of the year.
The kiwi is generally expected to rise against the Australian dollar in coming months. It was at 79.73 Australian cents at 8am, slightly down from the 79.86 cents at 5pm yesterday.
It was at 75.59 yen at 8am from 74.11 yen at 5pm yesterday, at 62.86 euro from 63.19 euro and at 52.57 British pence from 52.48 pence.
The trade-weighted index was at 75.50 from 75.40.