The New Zealand dollar fell on the combined weight of the ongoing trade war between China and the US and the local Reserve Bank's dovishness.

The kiwi was trading at 62.83 US cents at 5pm in Wellington, off the day's low at 62.67 cents but down from 63.09 at 7:50am. The trade-weighted index was at 70.52 from 70.69.

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When the Tokyo market opened, traders started selling kiwi "and that's been the pattern lately," says Imre Speizer, currency strategist at Westpac.

"It's not based on any new news" but the currency continues to be weighed down by the US-China trade dispute and the dovishness of the central bank, Speizer says.


The Reserve Bank cut its official cash rate by 50 basis points to 1 per cent a month ago, a magnitude of cut normally only seen in times of crisis.

As was widely expected, the Reserve Bank of Australia today left its cash rate unchanged at 1 per cent.

Tim Kelleher, head of foreign exchange sales at Commonwealth Bank of Australia, says 30 out of 34 economists had expected no change.

The RBA last cut its cash rate by 25 basis points on July 3 and made a cut of the same magnitude on June 5. They were the first moves since August 2016.

"They were seen as reluctant cutters in the first place," Kelleher says.

The RBA says its board "will continue to monitor developments, including in the labour market, and ease monetary policy further if needed to support sustainable growth in the economy and the achievement of the inflation target over time."

Despite the RBA's decision being widely anticipated, it lifted the Australian dollar and the kiwi was dragged a little higher in its trans-Tasman cousin's wake.

The latest word on the US-China trade negotiations is that the two nations are struggling to agree when and where to meet next, let alone the basis for further talks.


Additional tariffs imposed by both sides kicked in this month and further tariffs are scheduled.

The South China Morning Post has quoted China's Commerce Ministry spokesman, Gao Feng, as saying that "what should be discussed now is that the US must call off its plan to impose (additional) tariffs."

Traders have been using the progress of China's yuan as a proxy for progress in the trade talks, according to Reuters. The People's Bank of China has been allowing the currency to gradually depreciate against the US dollar.

PBOC set the mid-point for the yuan at 7.0884 to the US dollar today after allowing it to rise above 7 for the first time since 2008 early last month.

The New Zealand dollar was trading at 93.65 Australian cents from 93.88, at 52.20 British pence from 52.27, at 57.43 euro cents from 57.50, at 66.79 yen from 66.94 and at 4.5123 Chinese yuan from 4.5140.

The two-year swap rate fell to a bid price of 0.8925 per cent from 0.8969 yesterday. The 10-year swaps rose to 1.1950 per cent from 1.1850.