The New Zealand dollar gained after US inflation sapped expectations the US Federal Reserve will hike interest rates at this week's meeting, weighing on the greenback, and ahead of local data which will likely show slowing economic growth.

The kiwi rose to 63.66 US cents at 8am in Wellington from 63.48 cents yesterday. The trade-weighted index was unchanged at 68.72.

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The US consumer price index shrank 0.1 percent in July, in line with expectations, but eroding optimism the Federal Open Market Committee will raise interest rates when it announces its policy review on Thursday in Washington, and dragging the greenback lower. Traders are awaiting second-quarter gross domestic product data for New Zealand, which will likely show the country's economy expanded 0.6 percent in the period, as they assess whether the Reserve Bank will cut interest rates again.

"The risk is the Fed will disappoint tomorrow and you'll see a (US) dollar sell-off, given the CPI print overnight," said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional in Auckland. "The kiwi is on defensive ahead of GDP."

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The kiwi fell to 88.36 Australian cents from 88.83 cents yesterday, with Australia's currency outperforming in the trading session.

ASB's Kelleher said the Australian dollar's gain was due "to the market's acceptance that (Malcolm) Turnbull is probably a better PM (Prime Minister)" than his predecessor, Tony Abbott, who he ousted this week.

The local currency increased to 4.0548 Chinese yuan from 4.0416 yuan yesterday, and gained to 76.71 yen from 76.27 yen. It slipped to 41.04 British pence from 41.33 pence yesterday, and edged up to 56.38 euro cents from 56.19 cents.