The New Zealand dollar may decline this week as more economists bet that the Reserve Bank will start cutting interest rates as early as next month.

The kiwi may trade between 72 US cents and 77 cents this week, according to a BusinessDesk survey of 12 currency advisers.

Nine expect the kiwi to fall and three say it will probably remain largely unchanged.

None expect it to increase. It was recently trading at 74.08 US cents.


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The New Zealand dollar has dropped 2.5 per cent so far this month after the Reserve Bank signalled in late April that interest rate hikes were off the table and it was watching conditions that could prompt a rate cut.

The central bank urged the government to consider measures to contain Auckland's bubbling housing market as it monitors weak inflation, an elevated local currency and falling dairy prices.

ANZ Bank today joined Deutsche Bank and ASB Bank in forecasting 50 basis points of cuts over coming months.

"Local monetary policy and the local banks are really dominating," said Stuart Ive, senior dealer, foreign exchange, at OMF, who expects the kiwi to decline.

"It sets the tone, markets tend to lurch one way or the other."

ANZ and Deutsche expect the Reserve Bank to start cutting the 3.5 per cent benchmark interest rate by a quarter point in June, with another cut in July.

ASB says the first of two quarter point cuts will likely start in September.


Traders are pricing in a 46 per cent chance the Reserve Bank will reduce interest rates at its Monetary Policy Statement on June 11, according to the Overnight Index Swap Curve.

The focus this week will be on the Reserve Bank's six-monthly Financial Stability Report on Wednesday.

Reserve Bank governor Graeme Wheeler and deputy governor Grant Spencer will front a media conference at 9am and traders will be keen to hear if they elaborate on the bank's views from late last month.

Wheeler, Spencer and Bernard Hodgetts, head of the bank's macro financial department, will appear before parliament's finance and expenditure committee later that day at 1pm.

Also scheduled for release in New Zealand this week is Real Estate Institute monthly housing data, due tomorrow or Wednesday; April food price data on Wednesday; first-quarter retail data on Thursday and the BNZ-BusinessNZ Performance of Manufacturing Index on Thursday.

In China, the focus will be on April industrial production, retail sales and fixed asset investment data for April, after the nation's central bank yesterday announced it would reduce interest rates to stimulate the slowing economy.

China is New Zealand's largest trading partner.

In Australia, business confidence is due out today, ahead of the budget announcement tomorrow.

Australian home loan data is also due tomorrow, and the wage price index on Wednesday.

In the US, the focus this week will be on Wednesday's April retail sales figures after employment data last week missed expectations.

On Friday, US consumer confidence, manufacturing and industrial production reports are scheduled for publication.

Elsewhere, the Bank of England is expected today to say it kept interest rates unchanged at its latest policy review.

Its latest quarterly inflation report is due out Wednesday, and BoE governor Mark Carney will release the latest growth, inflation and unemployment forecasts.