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NZ dollar treads water

The New Zealand dollar was largely unchanged ahead of today's Reserve Bank policy review, which economists predict will echo sentiments overseas for rates to be held lower for longer. 

The kiwi traded at 67.33 US cents as at 8am in Wellington from 67.29 cents yesterday. The trade-weighted index decreased to 73.08 from 73.21 yesterday. 

Reserve Bank governor Adrian Orr is expected to keep the official cash rate at 1.75 percent in today's monetary policy statement. However, economists anticipate a more dovish tone in the statement after Australian and US central bankers pared back expectations for higher rates. Traders have responded by pricing in a cut to the OCR over the coming 12 months. 

"We are expecting a more dovish statement than that released in November in light of the slowdown in global growth and increased downside risks (much as that the RBA alluded to last week), but not one as dovish as that priced-in by the market," Bank of New Zealand interest rate strategist Nick Smyth said in a note. 

The kiwi was left behind by other risk-sensitive currencies after investors were buoyed by news that US policymakers had reached an in-principle agreement to avoid another Federal government shutdown. Stocks on Wall Street gained, with the Standard & Poor's 500 Index up 1.4 percent in late trading. 

The local currency fell to 94.84 Australian cents from 95.03 cents yesterday. ANZ Bank New Zealand economists Miles Workman and Sandeep Parekh said the kiwi was restrained by the looming central bank review, while the Aussie was boosted by the increase in risk sentiment. 

The kiwi fell to 4.5593 Chinese yuan from 4.5675 yuan yesterday. New Zealand's relationship with China is under increased scrutiny with Prime Minister Jacinda Ardern yet to finalise a visit to the country's biggest trading partner and Foreign Minister Winston Peters' tilt towards the US. 

No local data is scheduled for today, although Finance Minister Grant Robertson will appear before a select committee hearing talking to the budget policy statement and half-year economic and fiscal update. 

The New Zealand dollar traded at 52.19 British pence from 52.29 pence yesterday and decreased to 59.41 euro cents from 59.63 cents. It traded at 74.39 yen from 74.45 yen yesterday. 

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