The New Zealand dollar dropped as investors bet the Federal Reserve may reduce its bond buying programme as early as September.
The kiwi slipped to 77.06 US cents, from 77.38 cents in late New York trading and 78.01 cents at 5pm in Wellington on Friday. The trade weighted index weakened to 73.34 from 73.78 on Friday.
The Dollar Index, which measures the greenback against six major trading partners, closed at a month-high last week after Federal Reserve Governor Jeremy Stein said the central bank may make a decision about tapering its US$85 billion a month bond buying programme in September. The asset purchases, which aim to stimulate growth in the world's largest economy, have debased the greenback and bolstered supported for currencies such as the New Zealand and Australian dollars.
"More people are talking about tapering in September," said Imre Speizer, senior currency strategist at Westpac Bank "That caused the US dollar to go up and pushed other currencies down."
The Australian dollar dropped close to a three-year low of 91.05 US cents, recently trading at 91.16 cents. The New Zealand dollar rose against the Aussie, recently trading at 84.55 Australian cents, from 84.25 cents on Friday.
In Australia today, traders will be eyeing reports on manufacturing for June, house prices and inflation. The Reserve Bank of Australia meets tomorrow, with markets looking for confirmation of an easing bias and a reiteration that the Aussie has further to fall.
In China, all eyes today will be on a report on manufacturing for June for signs of expansion in Asia's largest economy.
The kiwi dropped to 76.66 yen from 77.12 yen at 5pm on Friday, slipped to 59.39 euro cents from 59.70 cents and weakened to 50.79 British pence from 51.08 pence.