The New Zealand dollar extended its decline against the Australian dollar on speculation the Reserve Bank of New Zealand will cut interest rates again this year while Australia’s central bank keeps its cash rate unchanged, narrowing the kiwi dollar’s premium.

The kiwi fell to 91.13 Australian cents at 0800 in Wellington, from 91.25 cents in New York on Friday and down from 91.69 cents in Asia at the end of last week. It traded at 66.80 US cents from 66.90 cents in New York.

Traders are awaiting NZ inflation figures this week, which are expected to confirm increases in consumer prices are well below the level the central bank targets on average, over time. That would give the Reserve Bank room to cut the official cash rate a quarter point to 2.5 per cent at its October 29 review, which the overnight interest swap curve puts at 78 per cent odds, or at the full monetary policy statement on December 10. By contrast, the odds of a Reserve Bank of Australia cut at its next meeting are just 22 per cent and that is also the extent of hikes seen to its cash rate in the next 12 months.