NZ dollar little changed ahead of RBNZ review expected to keep rates on hold

The kiwi dollar fell to 63.72 euro cents as at 8am in Wellington.

The New Zealand dollar barely budged heading into the Reserve Bank's latest policy review which is expected to keep the official cash rate at 1.75 per cent and retain a neutral bias on the outlook.

The kiwi traded at 72.25 US cents as at 8am in Wellington from 72.16 cents yesterday. The trade-weighted index was at 77.99 from 77.94 yesterday.

Central bank governor Graeme Wheeler is seen sticking to his existing policy script when he announces his latest review this morning.

The bank has a neutral bias although many economists expect interest rates to rise well ahead of the central bank's latest projections, which have just one quarter-point hike by 2020. Also out this morning, migration data for May will show whether the record net inflow of people to New Zealand, one of the key sources of stimulus that has also kept wage inflation low, is continuing unabated.

The RBNZ rates review "is widely expected to repeat May's policy guidance that the OCR will remain at 1.75 per cent for a long time," said Imre Speizer, senior markets strategist at Westpac Banking Corp, in a note. "Risks are slightly skewed in a dovish direction." The migration data "should show inflows running at near-record levels."

The kiwi slipped to 57.05 British pence from 57.12 pence after Bank of England chief economist Andy Haldane said he was ready to vote for an increase in UK interest rates "relatively soon", comments that contributed to a broadly stronger pound.

Bank of New Zealand currency strategist Jason Wong said in a note that there was a risk today's OCR review will include concern about the strong kiwi dollar, which on a trade-weighted basis is 2.6 per cent higher than the 76 level the RBNZ projected as the average for the second quarter is last month's monetary policy statement.

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The kiwi traded at 80.45 yen from 80.31 yen and rose to 4.9329 yuan from 4.9281 yuan. It rose to 95.61 Australian cents from 95.49 cents and fell to 64.71 euro cents from 64.83 cents.