US dollar strengthens ahead of Jackson Hole meet; NZ dollar drops on dovish RBNZ
The New Zealand dollar tumbled after the Reserve Bank said its board also considered a half-point cut in deciding to reduce the cash rate by a quarter point.
The kiwi slumped as much as 0.9 per cent to $0.5841, its lowest since April 14.
The U.S. dollar index, which measures the currency against six major counterparts, added 0.1 per cent to 98.438, its highest since August 12. In the first two days of this week, it gained about 0.4 per cent.
Friday's speech by Fed Chair Jerome Powell is the market's main focus, as traders watch for any pushback against market pricing of a rate reduction next month.
Traders now place odds of 84 per cent on such a cut, and expect about 54 basis points of reductions by year-end.
"Given the relatively high bar for Powell to meet, there's a bit of risk being baked into the markets that he leans to the hawkish side and the proverbial rug gets pulled from beneath investors," said Kyle Rodda, an analyst at Capital.com.
Traders, who ramped up bets for a Fed cut on September 17 after a surprisingly weak payrolls report at the start of this month, were further encouraged after consumer price data showed limited upward pressure from tariffs.
However, a hotter-than-expected producer price reading last week complicated the policy picture.
Powell has said he is reluctant to cut rates because of expected tariff-driven price pressures this summer.
Later on Wednesday, the Fed will issue the minutes of its meeting on July 29 and 30, when it held rates steady, although they may offer limited insight as the meeting came before the weak jobs numbers.
The dollar advanced 0.1 per cent to 0.80885 Swiss franc, though it edged slightly lower to 147.56 yen.
The euro eased 0.2 per cent to $1.1626, and sterling slipped 0.2 per cent to $1.3463.
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