The New Zealand dollar fell ahead of tomorrow's December inflation figures which are seen as feeding into the Reserve Bank's interest rate outlook, and after an earthquake in the lower North Island caused a brief flurry of selling.
The kiwi traded at 82.43 US cents at 5pm in Wellington from 82.46 cents at 8am, down from 82.62 cents on Friday in New York. The trade-weighted index declined to 78.37 from 78.61 last week.
New Zealand's consumers price index is forecast to have fallen 0.1 percent in the final three months of 2013, for an annual rate of 1.5 percent, according to a Reuters survey. The RBNZ plans to hike interest rates this year to head off the threat of inflation, and investors will be watching the CPI to gauge when governor Graeme Wheeler might start tightening policy. Traders are betting the 2.5 percent official cash rate will rise 109 basis points over the coming 12 months, according to the Overnight Index Swap curve.
"CPI looms large - we know it's a key figure, especially with all the talk being about interest rates at the moment," said Alex Hill, head of dealing at HiFX in Auckland. "It might impact on the tone from Wheeler at the end of the month."
Today's 6.3 magnitude earthquake in the Lower North Island sparked a brief drop in the local currency, which it has since recovered, though Hill said the strength of the US dollar will keep the kiwi under pressure.
