The New Zealand dollar extended its gains for a seventh day as a holiday in the US kept global markets quiet and as local inflation data comes into focus for traders assessing whether the Reserve Bank will cut interest rates again.
The kiwi rose to 67.13 US cents at 8am in Wellington from 66.97 cents yesterday. The trade-weighted index was little changed at 71.63 from 71.57 yesterday.
Trading in global markets was subdued in the Northern Hemisphere session due to the US Columbus Day holiday, with stocks on Wall Street edging higher in the lead-up to corporate earnings season.
Locally, investors are preparing for the release of the September food prices index, the final component before Friday's September quarterly inflation reading, which will provide a gauge on whether New Zealand's central bank will cut interest rates further. Traders are pricing in a 22 percent chance of a cut at this month's monetary policy review.
"Inflation according to the (ANZ September inflation gauge) is probably not going to give the RBNZ the smoking gun that the markets need to make it clear what's going to happen in October, suggesting the RBNZ will probably pause and keep some powder dry," said Sam Tuck, senior FX strategist at ANZ Bank New Zealand in Auckland. "We've had seven positive candles in a row, where the kiwi closes above its open, and those sorts of runs are rare."
