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% to US$0.5841, its lowest since April 14.

The US dollar index, which measures the currency against six major counterparts, added 0.1% to 98.438, its highest since Aug 12.

In the first two days of this week, it gained about 0.4%.

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% on such a cut, and expect about 54 basis points of reduction 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 Sept 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 today, 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 US dollar advanced 0.1% to CHF0.80885, though it edged slightly lower to Japanese yen at ¥147.56.

The euro eased 0.2% to US$1.1626, and sterling slipped 0.2% to US$1.3463.

Australia’s dollar declined 0.3% to US$0.6435, its weakest since Aug 1.