The New Zealand dollar rose before the Reserve Bank's policy statement as investors weighed the prospects for a gradual reduction in momentary stimulus in the US and the greenback dropped against most major currencies.
The kiwi gained to 79.59 US cents, from 78.76 cents at 5pm yesterday. The trade-weighted index edged up to 74.06 from 73.45 yesterday.
The dollar index, which measures the greenback against six major trading partners, dropped to its lowest in four months as traders ponder the end of the Federal Reserve's quantitative easing. The Fed is expected to start reducing its US$85 billion-a-month asset purchase programme as the world's largest economy shows sustained improvement.
"The US dollar weakened somewhat. There's a bit of concern about when the Federal Reserve is going to start their bond buying tapering," said Michael Johnston, a senior trader at HiFX. "The US dollar has strengthened quite substantially in recent times and I don't necessarily think the end is over."
A report in the US on Friday is expected to show retail sales grew 0.4 per cent in May from 0.1 per cent, according to a Reuters survey.
