The New Zealand dollar may fall as traders continue to back the greenback in the face of mixed US economic data driving down interest rates in the world's biggest economy, which would typically weigh on the American currency.
The kiwi traded at 86.42 US cents at 5pm in Wellington from 86.38 cents at 8am, down from 86.84 cents yesterday. The trade-weighted index fell to 80.34 from 80.72 yesterday.
Yields on US Treasuries fell after Federal Reserve chair Janet Yellen told policymakers the nation's economy has further to go to achieve full health, while industrial production figures missed expectations. Better than expected employment data and accelerating inflation painted a mixed picture of the US economy, and traders continued to back the greenback despite the fall in interest rates.
"US interest rates have been falling sharply for quite a while, but the US dollar is not following," said Imre Speizer, market strategist at Westpac Banking Corp in Auckland. "On that basis, the kiwi/US has got a negative bias to it in the near-term."
If the kiwi breaks below 86.30 US cents, it may drop "towards the low 85s" as investors wait for next month's Reserve Bank policy review, which may show a slower track of interest rate hikes, Westpac's Speizer said.
The kiwi is heading for a 0.4 percent weekly increase from 86.10 US cents at the close of New York trading last Friday, and a 0.3 percent gain on a trade-weighted basis from 80.19.
A BusinessDesk survey of 10 traders and strategists on Monday predicted the kiwi would trade between 84.75 US cents and 87.50 cents this week. Seven predicted the kiwi would fall this week, while three picked it to remain largely unchanged.
The New Zealand dollar fell to 63 euro cents at 5pm in Wellington from 63.32 cents yesterday, and declined to 51.47 British pence from 51.77 pence. It sank to 87.72 yen from 88.43 yen yesterday, and dropped to 92.36 Australian cents from 92.61 cents.