"It's been a quiet day, but it's also been one of subtle New Zealand dollar strength – overnight, it was one of, if not the best-performing OECD currency," says Peter Cavanaugh, the senior client advisor at Bancorp Treasury Services.
The level of short positions in the New Zealand dollar had reached record levels last week when the currency fell as low as 62.50 cents, its lowest level since September 2015.
Most of those positions are being unwound ahead of the end of the quarter later this month, so that strength should persist, Cavanaugh says.
"That pre-supposes there isn't another event offshore that prompts another burst of risk aversion," he says.
But it's all quiet on the US-China trade war front at the moment. Chinese negotiators left the US last week and high-level talks are expected to resume in early October.
German business confidence data and US consumer confidence numbers overnight mean "we might get a few speed-bumps" because these tend to be leading indicators of economic activity, Cavanaugh says.
Although US manufacturing data yesterday was mildly positive, counterpart data in Japan and Europe were weak, particularly in Germany where manufacturing contracted for a third consecutive month, boding ill for that country's GDP.
Germany's GDP contracted 0.1 per cent in the June quarter and a second negative quarter would put that economy officially in recession.
RBA governor Philip Lowe is giving "An Economic Update" tonight and is expected to foreshadow a rate cut in early October.
The RBNZ is expected to hold its OCR steady tomorrow, although the market is pricing in a high probability of a rate cut in November.
The kiwi was trading at 92.88 Australian cents from 92.90, at 50.66 British pence from 50.60, at 57.29 euro cents from 57.24, at 67.75 yen from 67.61 and at 4.4786 Chinese yuan from 4.4772.
The two-year swap rate nudged up to a bid price of 0.9288 per cent from 0.9234 yesterday while 10-year swaps rose to 1.2325 per cent from 1.2275.