The New Zealand dollar has dipped after dairy exporter Fonterra surprised investors by keeping its forecast payout to farmers unchanged.
The kiwi dropped to 82.78 US cents at 5pm in Wellington from 83.11 cents at 8am, little changed from 82.91 cents on Tuesday. The trade-weighted index declined to 77.54 from 77.78.
Fonterra kept its forecast payout to farmers at $8.30 per kilograms of milk solids for this season, dashing expectations the world's biggest dairy exporter would pay more for its base ingredient amid rising global prices.
That came ahead of Thursday's last monetary policy statement for the year, where governor Graeme Wheeler is expected to keep the official cash rate at 2.5 percent, while he balances the need for future hikes to stave off the threat of inflation against attracting investors to an already strong currency.
"The expectations were that Fonterra were going to lift the payout up - we'd heard scuttlebutt of $9, even up to $10, so that was a little bit of a surprise," said Michael Johnston, a senior dealer at HiFX in Auckland.
"But the kiwi's holding up given the RBNZ is out tomorrow."
Traders have priced in 116 basis points of increases to the OCR over the coming year, according to the Overnight Index Swap curve.
But Mr Wheeler may have to trim his track for future hikes given the persistent strength of the currency after the US Federal Reserve didn't start unwinding its $US85 billion ($NZ102.26b) asset purchase programme in September.
The quantitative easing has been debasing the greenback by flooding the market with US dollars.
"We expect them to talk about the kiwi being overvalued," HiFX's Mr Johnston said.
The kiwi fell to 90.62 Australian cents at 5pm in Wellington from 91.06 cents on Tuesday, to 60.14 euro cents from 60.28 cents and to 84.94 yen from 85.62 yen.