The New Zealand dollar advanced in quiet trading as investors await direction from looming central bank meetings and new data on dairy prices and employment.
The kiwi gained to 85.23 US cents at 8am in Wellington, from 85.10 cents at 5pm yesterday. The trade-weighted index edged up to 79.80 from 79.74 yesterday.
The New Zealand dollar is consolidating this week after falling about 3 percent since the start of July, weighed down by weaker commodity prices, the outlook for reduced payments to dairy farmers, and a pause in future interest rate hikes and speculation the Reserve Bank may intervene in the market after governor Graeme Wheeler called the currency's strength "unjustified". Tomorrow, the focus will be on Fonterra Cooperative Group's GlobalDairyTrade auction for a gauge on how New Zealand's biggest exporter is faring after dairy prices fell to their lowest level since December 2012 in the last fortnightly auction. New Zealand employment figures tomorrow will also be watched.
"Most currencies have traded tight ranges over the past 24 hours," Kymberly Martin, senior market strategist at Bank of New Zealand, said in a note. "Markets were fairly directionless in the absence of key data releases overnight."
The New Zealand dollar has support at 84.60 US cents and faces resistance at 85.40 cents, she said.
The kiwi/Aussie cross rate may be the focus of attention today as the Reserve Bank of Australia is scheduled to announce its latest policy at 4:30pm New Zealand time. The bank is expected to keep its benchmark interest rate at a record 2.5 percent and retain its 'neutral' bias. The New Zealand dollar edged up to 91.30 Australian cents from 91.28 cents yesterday.
The local currency rose to 63.51 euro cents from 63.40 cents yesterday ahead of the European Central Bank meeting on Thursday where concerns are mounting about soft inflation. Consumer prices in the 18-nation currency bloc rose a lower-than-expected 0.4 percent in July, from a 0.5 percent pace in June. Inflation for July was the weakest reading since October 2009.
The kiwi was little changed at 50.56 British pence from 50.57 pence yesterday ahead of the Bank of England meeting on Thursday.
The New Zealand dollar edged up to 87.42 yen from 87.37 yen yesterday as traders await the Bank of Japan meeting on Friday.
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