The New Zealand dollar is heading for a 1.8 per cent weekly fall on a trade-weighted basis as traders second-guess what the Reserve Bank will say when it gives an updated view on the economy next Thursday, and ahead of Monday's inflation print.
The trade-weighted index fell to 76.13 from 77.54 last week, and is down from 76.81 on Thursday. The kiwi is heading for a 2.1 per cent weekly drop against the greenback, trading at US71.54c at 5pm from US73.04c in New York last week, and down from US72.04c on Thursday.
The Reserve Bank surprised investors when it said it would "issue a brief update on its economic assessment" on July 21 because of the longer gap between meetings in the bank's new timetable.
Traders are pricing in a 68 per cent chance governor Graeme Wheeler will cut the official cash rate a quarter-point to 2 per cent on August 11, having previously priced in a 40 per cent chance.
"People are expecting the bank to adjust their view and possibly increase the bets on a rate cut," said Mitchell McIntyre, senior corporate foreign exchange dealer at NZForex in Auckland. "It's all speculation at this stage, but the kiwi's taken a bit of a walloping."
