By Paul McBeth
The New Zealand dollar gained after US inflation sapped expectations the US Federal Reserve will hike interest rates when at this week's meeting, weighing on the greenback, and ahead of local data which will likely show slowing economic growth.
The kiwi rose to 63.66 US cents at 8am in Wellington from 63.48 cents. The trade-weighted index was unchanged at 68.72.
The US consumer price index shrank 0.1 percent in July, in line with expectations, but eroding optimism the Federal Open Market Committee will raise interest rates when it announces its policy review on Thursday in Washington, and dragging the greenback lower.
Traders are awaiting second-quarter gross domestic product data for New Zealand, which will likely show the country's economy expanded 0.6 percent in the period, as they assess whether the Reserve Bank will cut interest rates again.
"The risk is the Fed will disappoint tomorrow and you'll see a (US) dollar sell-off, given the CPI print overnight," said ASB's Tim Kelleher. "The kiwi is on defensive ahead of GDP."
The kiwi fell to 88.36 Australian cents from 88.83 cents, with Australia's currency outperforming in the trading session after Malcolm Turnbull replaced Tony Abbott as Prime Minister.
The local currency increased to 4.0548 Chinese yuan from 4.0416 yuan, gained to 76.71 yen from 76.27 yen, slipped to 41.04 British pence from 41.33 pence and edged up to 56.38 euro cents from 56.19 cents.