The New Zealand dollar was little changed as investors remain cautious before Thursday when the Reserve Bank joins the US Federal Reserve and Bank of Japan in reviewing monetary policy.

The kiwi traded at 68.45 US cents at 8am in Wellington from 68.57 cents at 5pm yesterday when it was unchanged from the New York close on Friday. The trade-weighted index declined to 72.27 from 72.50 last week.

Traders are pricing in a 55 percent chance Reserve Bank governor Graeme Wheeler will cut the official cash rate to 2 percent on Thursday to try and spur inflation back within his 1 percent-to-3 percent target band.

Potentially easing some of the tension Wheeler faces when judging whether a rate cut would overheat the nation's bubbling housing market, Prime Minister John Key said his government is looking at introducing a land tax on overseas property buyers.


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The US Federal Open Market Committee will review its policy the same day and is expected to keep its gradual path to higher rates intact depending on how the data plays out, while speculation is mounting that the Bank of Japan may expand its asset purchase programme.

"While the FOMC's decision to leave rates unchanged and maintain its 'data-dependent' line is a straightforward call, no one is really certain what the RBNZ will do," Bank of New Zealand currency strategist Jason Wong said in a note. "Our out-of-consensus call for the RBNZ to cut rates and keep the door open for more would help the NZD soften on the day, while the bank remaining on the sidelines could encourage a move to retest the 0.70 (US cents) handle."

The kiwi fell to 47.28 British pence from 47.47 pence yesterday and declined to 60.77 euro cents from 60.94 cents as the British pound rose to a two-month high on dwindling expectations the UK will quit the euro-zone. US President Barack Obama has been urging British citizens to stay in the shared economic zone during his visit to the UK.

The local currency was stable at 76.13 yen from 76.10 yen yesterday, and slipped to 88.79 Australian cents from 88.97 cents. It decreased to 4.4450 Chinese yuan from 4.4567 yuan yesterday.