The New Zealand dollar edged lower against the greenback after a small rally in US bond yields in the New York session boosted investor appetite for the US currency.
The kiwi recently traded at US80.65 cents, down from US80.91c at 5pm on Friday, while on the Trade Weighted Index of major trading partners' currencies it slipped to 72.93 from 72.99.
Yields on US 10-year Treasuries spiked last week to a three month high of 1.8398 per cent after data suggested the world's biggest economy was still recovering, dousing some bets the Federal Reserve would forced to rollout another round of quantitative easing.
That tilted demand in favour of the US dollar, and away from risk-link currencies such as the New Zealand and Australian dollar. The kiwi mostly held its ground, but reports that Australian Prime Minister Julia Gillard is set to face a new leadership challenge added momentum to the sell off in the Aussie.
"Currencies continued to bask in afterglow of the jump in US bond yields, garnering support for the US dollar," said Mike Jones, a market strategist at Bank of New Zealand. He characterised trading in the offshore session as a "listless, range bound affair".
There is little in the way of currency-moving data on the New Zealand calendar this week, shifting the focus to the release of the US Federal Open Market Committee minutes on Wednesday, followed by various US housing data releases.
Eurozone policy meetings also start in the latter half of the week, and any headline shocks will most probably flow through into markets, Jones said.
On the crosses, the New Zealand dollar recently traded at 77.33 Australian cents, up from 77.29 on Friday, and slipped rose to 64.05 yen from 64.18 yen. The kiwi fell to 65.31 euro cents from 65.55 euro cents last week, and it dropped to 51.37 pence from 51.54 pence.
The kiwi may trade between US80.40c and US81c today, according to Jones, with further range trading in store for the remainder of the week albeit with a downward bias.
- © Fairfax NZ News