The New Zealand dollar slipped ahead of a report on third quarter inflation which is expected to show prices rose at a slower pace than the Reserve Bank predicted, signalling interest rates are likely to remain at current levels for longer.
The kiwi fell to 79.38 US cents at 8am in Wellington, from 79.76 cents at 5pm yesterday. The trade-weighted index declined to 77.20 from 77.42 yesterday.
New Zealand consumer prices probably rose 0.5 percent in the three months through September, lagging the Reserve Bank's forecast for a 0.7 percent gain. Inflation is the last piece of data the Reserve Bank will take into account before its review of the official cash rate on Oct. 30, following gross domestic product and the New Zealand Institute of Economic Research quarterly survey of business confidence.
"If the market is correct, then all three will have come out lower than the Reserve Bank's assumptions in September so that therefore leads to interest rates lower for longer and a bit more downward pressure on the kiwi," said Peter Cavanaugh, senior advisor at Bancorp Treasury Services.