The New Zealand dollar hardly moved on the forex market today, symbolic of a no change decision in tomorrow's Monetary Policy Statement.
Neither the cash rate nor the tough tone of governor Alan Bollard's ant-inflation rhetoric is expected to change.
Currency markets were dominated by US dollar strength overnight, although it gave back some of its gains during Asian trading.
The kiwi closed unchanged from its opening at US62.75c and a little down on yesterday's US62.85c close.
Against the aussie, it was buying A84.65c against A84.40c yesterday. The trade-weighted index ended on 62.72 from 62.62 yesterday.
The US dollar slipped against the yen but stayed near a one-month high as investors treaded carefully after the US currency shot up this week on mounting expectations that the Federal Reserve will raise interest rates again this month.
The US currency gained across the board on Tuesday after St. Louis Fed President William Poole was quoted by the Wall Street Journal as saying that a slowing economy on its own may not reduce inflationary pressures.
The Australian dollar closed on US74.13c from US74.48c yesterday. The Reserve Bank of Australia left rates unchanged, to noone's surprise.
Similar reaction is expected in the New Zealand dollar market tomorrow, so long as the bank delivers on the no change prediction.
ANZ Investment Bank said higher NZ commodity prices and expectations of rising inflation had not been enough to rescue the NZ dollar which the bank described as a "flightless bird".
Offshore sellers had established short positions ahead of the MPS and could be vulnerable to a short squeeze upward in the currency.
The following are Reuters currency rates:
5pm today 5pm Tuesday
NZ dlr/US dlr US62.75c US62.85c
NZ dlr/Aust dlr A84.65c A84.40c
NZ dlr/euro 0.4891 0.4875
NZ dlr/yen 71.00 70.68
NZ dlr/stg 0.3369 0.3360
NZ TWI 62.72 62.62
Australian dollar US74.13c US74.48c
Euro/US dollar US1.2828 US1.2896
US dollar/yen 113.10 112.38
- NZPA
<i>Currency:</i> NZ dollar steady ahead of monetary policy statement
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