The New Zealand dollar is headed for a 0.8 per cent weekly gain with investors expecting a rate cut in the US at the end of this month but wary ahead of domestic inflation data next week.

The kiwi was trading at 66.82 US cents at 5pm in Wellington from 66.66 cents at 8am and 66.27 cents last Friday in New York. The trade-weighted index was at 73.06 from 72.91 this morning.

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Comments by Federal Reserve Chair Jerome Powell this week coupled with minutes from the latest June meeting weighed on the greenback as markets are still expecting at least a 25-basis point rate cut. The chances of a 50-basis point cut have fallen from around 30 per cent to around 20 per cent according to the CME Group's FedWatch Tool.

OMF private client manager Mark Johnson said the gains in the kiwi were due to US dollar weakness as opposed to any specific domestic drivers. That may change with June quarter consumer price inflation data due on Tuesday.

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Johnson notes that market consensus is for a 0.6 per cent quarterly lift which "on the face of it would be well received." However, given the impact of rising fuel prices, the underlying picture is likely to remain tepid.

"As long as inflation is in line or below expectations there will be no reason to deter me from expecting a rate cut in August" from the Reserve Bank, he said. Markets are currently pricing a 73 per cent chance of an August rate cut while September is fully priced.

"Therefore, ahead of the CPI data and a pending rate cut, it would still seem to me to be a 'sell the rally' mode. I don't think the kiwi is going to run away too far."

The kiwi dollar was at 95.53 Australian cents, unchanged from this morning. It was at 53.27 British pence from 53.19, at 59.27 euro cents from 59.22, at 72.36 yen from 72.27, and at 4.5914 Chinese yuan from 4.5777.

The New Zealand two-year swap rate was at 1.3419 per cent from 1.3123 late yesterday, while the 10-year swap rate was at 1.8400 per cent from 1.7450 per cent.