The New Zealand dollar fell to a seven-month low against the Australian dollar after consumer inflation figures from across the Tasman came in stronger than expected, surprising traders who had been betting on a fall.
The kiwi recently traded at 76.48 Australian cents, down from A76.70c at 8am. On the Trade Weighted Index of major trading partners' currencies, it fell to 71.23 from 71.82.
Headline Australian Consumer Price Inflation figures for the second quarter came in at 0.5 per cent, hitting consensus from economists. However, Imre Speizer, a market strategist at Westpac, said traders had been bracing themselves for a weaker print due to its strong correlation to its New Zealand equivalent.
The surprise read, suggesting the Australian economy may not be slowing as much as feared, saw the aussie outperform versus all of its peers.
Speizer said the kiwi is likely to gain some ground ahead of the Reserve Bank's official cash rate announcement tomorrow, barring any headline shocks out of Europe.
"We think the tone of the statement will use slightly more dovish language than they used in June," he said, with the benchmark interest rate seen unchanged at the historically low level of 2.5 per cent.
On the crosses the kiwi closed the local trading day at US78.20 cents, down from US78.49c at 8am, and it fell to 61.12 yen from 61.35 yen. The kiwi slipped to 64.78 euro cents from 65.06 euro cents, and dropped to 50.42 pence from 50.59 pence.
- © Fairfax NZ News