The New Zealand dollar gained, although it remains within this week's narrow trading range pending an announcement on the next government, after minutes of the last Federal Reserve meeting showed concerns about weak inflation.

The kiwi rose to 70.91 US cents as at 8am in Wellington from 70.75 cents late yesterday. The trade-weighted index was at 74.66 from 74.59 yesterday.

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The New Zealand dollar has traded in a range of less than half a US cent this week, remaining near its lowest levels in more than four months as the market awaits the decision of the NZ First Party that will determine the next government. Meanwhile, the minutes of the Fed's September 19-20 meeting said many of those at the policy meeting "expressed concern that the low inflation readings this year might reflect not only transitory factors, but also the influence of developments that could prove more persistent."

"The minutes didn't surprise and market reaction was fairly muted," Jason Wong, currency strategist at Bank of New Zealand, said in a note. "The odds of another Fed hike in December remained steady around 75 per cent after the minutes were released."


Commenting on the broadly weaker kiwi dollar in the wake of the political negotiations, Wong said: "As the talks have progressed it seems that traders have been reducing their NZD exposure, nervous of the outcome and what agreed policies might emerge."

Today traders will be watching for the Real Estate Institute's house sales figures for September and also the release of the food price index, a key element in the third-quarter consumers price index. Also out today is the ANZ-Roy Morgan Consumer Confidence survey for October.

The local currency fell to 59.77 euro cents and earlier touched 59.61 cents, the lowest in 17 months, from 59.91 cents yesterday amid speculation the European Central Bank is closer to unwinding some of its ultra-loose monetary policy settings. The kiwi was little changed at 53.60 British pence and traded at 79.68 yen from 79.56 yen yesterday.

The kiwi was little changed at 90.94 Australian cents from 90.90 cents and increased to 4.6709 yuan from 4.6677 yuan.