NZ dollar little changed before CPI report

The New Zealand dollar was little changed from the close of trading last week ahead of Tuesday's consumer price index, which is expected to show benign inflation in the second three months of the year.

The kiwi traded at 79.61 US cents at 5pm from 79.67 cents at 8am and 79.51 cents last week.

The trade-weighted index was little changed at 72.32 from 72.35 on Friday in New York.

New Zealand consumer prices rose 0.5 per cent in the three months ended June 30, unchanged from the first quarter.

That would see annual inflation slow to 1.1 per cent from an annual pace of 1.6 per cent, just within the Reserve Bank's target band of between 1 per cent and 3 per cent.

Inflation "expectations are very, very tight and we would be very surprised to see a surprise," said Imre Speizer, market strategist at Westpac Banking in Auckland.

"Sentiment has clearly bounced" in anticipation of US Federal Reserve chairman Ben Bernanke's testimony in front of policymakers this week, which has helped demand for the kiwi.

Mr Bernanke will appear before Senate and House of Representatives committees this week to discuss the Fed's outlook for the economy.

When Mr Bernanke hinted at the second round of asset purchases, "the data was more dire - it's heading that way and is going to get worse" and there are people hoping he'll "nip it in the bud", Mr Speizer said.

New Zealand's service sector continued to expand last month, though at a slower pace, according to the BNZ/Business NZ performance of services index.

The kiwi rose to 77.84 Australian cents from 77.66 cents last week, and was little changed at 62.91 yen from 62.93 yen.

It increased to 64.98 euro cents from 64.87 cents, and was little changed at 51.08 pence from 51.05 pence.

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