The New Zealand dollar fell ahead of a speech by Federal Reserve chair Janet Yellen as investors look for insight into the US central bank's view on interest rates and await tomorrow's release of local inflation figures.
The kiwi slipped to 86.51 US cents at 5pm in Wellington from 86.78 cents at 8am from 86.82 cents yesterday. The trade-weighted index declined to 80.26 from 80.45.
Yellen opens the Federal Reserve Bank of Atlanta's financial markets conference, which is themed on proposals and actions in response to the global financial crisis. Investors will be looking for insight into the Fed's thinking after minutes to its last policy meeting showed policy makers were concerned that projections for an interest rate rise were overstated and could be misconstrued by the market.
"Yellen is probably going to be the big one - when she opened her mouth last time it pushed back expectations when the Federal Reserve will go," said Michael Johnston, senior trader at HiFX in Auckland. "I'd be surprised if the kiwi goes through 86.20 US cents unless Yellen says something surprising."
Figures tomorrow are expected to show New Zealand's consumers price index rose at an annual pace of 1.7 per cent rate in the first quarter, according to a Reuters survey, the fastest pace since the fourth quarter of 2011. Accelerating inflation is behind the Reserve Bank's shift to tighter monetary policy, and traders expect another rate hike next week to 3 per cent.
