The New Zealand dollar stuck to a tight range, largely sidelined as risk-averse traders await the European Central Bank's upcoming rate decision and commentary in Frankfurt on Thursday.

The kiwi traded at 65.61 US cents at 5pm in Wellington from 65.56 US cents at 8am in Wellington and 65.40 cents yesterday. The trade-weighted index was at 71.91 from 71.82 yesterday.

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Sentiment took a hit after the European Commission rejected Italy's plan to incur a budget deficit of 2.4 per cent of gross domestic product in 2019. Investors, concerned about the prospects for European growth, are now watching for any commentary from the ECB's monetary policy meeting on the Italian situation as well as on global trade tensions in general.

Closer to home, the kiwi eased against the Australian dollar and was trading at 92.40 Australian cents from 92.55 dollars yesterday. Imre Speizer, Westpac Banking Corp's head of NZ strategy, said the Aussie had "picked itself up" after falling on news the country's ruling Liberal-National coalition looked to have lost its one-seat parliamentary majority and now faces the threat of snap elections.

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"There was a bit of a reaction after that, but it all seems fully priced in now," said Speizer. News that China is lowering housing and medical costs to boost consumption may have also given the Aussie a lift, he said.

Speizer said the focus will remain offshore and the next major event for global markets will be the US mid-term primaries in November.

The kiwi was at 57.23 euro cents from 57.09 cents and increased to 4.5517 Chinese yuan from 4.5385 yuan. It was at 50.53 British pence from 50.44 pence yesterday and at 73.85 yen from 73.60 yen.

New Zealand's two-year swap rate was unchanged at 2.02 per cent; the 10-year swaps fell 2 basis points to 2.86 per cent.