NZ dollar 'struggling' ahead of OCR review

The New Zealand dollar may trade in a range of 85 US cents and 86 cents today. Photo / File

The New Zealand dollar fell before the April HSBC Flash Chinese PMI today, which will provide more evidence of growth in the nation's No. 2 export market, while traders are looking ahead to the central bank policy review tomorrow.

The kiwi fell to 84.16 US cents from 84.32 cents at 5pm in Wellington yesterday. The trade-weighted index sank to 77.84 from 78.01.

The unofficial Chinese manufacturing survey comes after economic growth figures last week showed China's economy is growing at a slower-than-expected pace. In a week divided by the Anzac Day holiday on Thursday, inflation data out of Australia and the Reserve Bank of New Zealand's rate review tomorrow are likely to hold the market's focus.

"The kiwi is struggling ahead of the RBNZ tomorrow," said Tim Kelleher, head of institutional FX sales at ASB Institutional. "The market's expecting (Governor Graeme) Wheeler to say something about the high kiwi."

Wheeler is expected to keep the official cash rate unchanged at 2.5 per cent tomorrow. He will be balancing the effects of a high currency in containing inflation against a housing market that is heating up and threatens to drive up prices more broadly.

Economists are expecting China's PMI slipped to 51.5 in April from 51.6 in March.

"The market is still a bit shaken up following the surprising weakness in last week's China data," said Mike Jones, strategist at bank of New Zealand.

The kiwi traded little changed at 81.89 Australian cents and slipped to 64.41 euro cents from 64.52 cents. It fell to 55.02 British pence from 55.38 pence and dropped to 83.47 yen from 84.13 yen.