The New Zealand dollar edged up overnight as investors reduced their holdings of US dollars amid uncertainty about the pace of future interest rate rises in the world's largest economy.
The kiwi advanced to 69.32 US cents at 8am in Wellington, from 68.94 cents at 5pm yesterday. The trade-weighted index gained to 71.96 from 71.77 yesterday.
The US dollar index, which measures the greenback against a basket of currencies, touched a month-low overnight as weaker-than-expected US inflation data added to uncertainty about when the Federal Reserve is likely to start hiking interest rates. The US dollar has fallen out of favour after the Federal Open Market Committee this week pulled back its economic growth forecasts and trimmed its expectations for future interest rate increases.
"Investors continued to sell the US dollar after the FOMC rate decision," Kathy Lien, managing director of FX strategy at BK Asset Management in New York, said in a note. "Investors hoped that (Fed chair Janet) Yellen would be more hawkish."
Still, BK's Lien said the US dollar remains attractive with the Fed likely to raise rates at least once this year.
