The New Zealand dollar was little changed against the greenback and fell versus the Australian dollar ahead of the Reserve Bank of Australia's policy review and a monthly commodity report that may show prices are strengthening.

The kiwi traded at 82.74 US cents from 82.71 cents at 5pm in Wellington yesterday. It fell to 79.79 Australia cents from 80 cents and the trade weighted index weakened to 73.66 from 73.75.

Traders are putting a 66 per cent chance on a rate cut by the RBA, which would narrow the gap with New Zealand rates and make the kiwi appear relatively more attractive. The tone of the statement will also have a bearing, because it will show whether the RBA sees the Australian economy slowing markedly.

The ANZ Commodity Price Index due out today will show whether prices are holding up for New Zealand's mainly food-based exports.


"A failure to act by the RBA would see the NZD/AUD check some of its recent gains," said Mike Jones, currency strategist at Bank of New Zealand. "We'd view this outcome as more of a healthy correction rather than a definitive change in the trend."

The kiwi dollar didn't move much against the greenback after figures showed the Institute for Supply Management's US factory index unexpectedly rose to 51.5 in September from 49.6 a month earlier. The European aggregate PMI held little changed at 46.1 while yesterday, China's official PMI remained in contraction at 49.8 from 49.2 in August, against economist expectations of a return to growth.

Stocks gained in the US and in Europe overnight, though that didn't translate into a more typical risk-on lift in the kiwi dollar.

The currency was little changed at 51.29 British pence and fell to 64.20 euro cents from 64.48 cents. It gained to 64.58 yen from 64.37 yen.