The New Zealand dollar was little changed ahead of figures expected to show inflation picked up in the third quarter, holding in a narrow trading range pending the outcome of talks to form the new government.

The kiwi was trading at 71.65 US cents as at 8am in Wellington from 71.72 cents late yesterday. The trade-weighted index was at 75.34 from 75.30 yesterday.

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Figures this morning are expected to show inflation was 0.4 per cent in the third quarter, after a flat second quarter, for an annual pace of 1.8 per cent. That's faster than the 0.2 per cent quarterly and 1.6 per cent annual rate projected by the Reserve Bank in August although traders say it isn't likely to be enough to prompt the bank to reconsider keeping interest rates on hold for the foreseeable future.

The market is also awaiting the dairy auction tonight after prices unexpectedly fell at the sale two weeks ago.

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"We need to see core inflation measures move a lot higher to get the RBNZ's attention, which will likely take more time," said Jason Wong, currency strategist at Bank of New Zealand, in a note. "The NZD has been stuck in a tight range ... as we await the formation of a new government. On our short-term model, the NZD is a touch oversold, given the backdrop of very strong risk appetite."

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) is currently at 9.84, down from more than 17 in August.

In late 2008, as the global financial crisis unfolded, it soared to almost 90. A low reading suggests there is less 'fear' in financial markets.

The market had been expecting an announcement on the next government as soon as yesterday although National leader Bill English said it may take until the end of the week as NZ First considers rival options with Labour and National.

Tonight's GlobalDairyTrade auction will be closely watched after the last auction two weeks ago saw whole milk powder fall 2.7 per cent and the GDT price index drop 2.4 per cent.

A further decline would stoke speculation Fonterra Cooperative Group, the nation's biggest business, won't meet its forecast milk payout for the 2017/18 season.

The kiwi rose to 91.30 Australian cents from 91.06 cents yesterday. It traded at 4.7193 yuan from 4.7170 yuan and rose to 80.39 yen from 80.26 yen. The kiwi traded at 54.08 British pence from 53.96 pence and was little changed at 60.75 euro cents.