The New Zealand dollar fell from its highs against the Australian dollar, touching a week low, as some investors took advantage of the gains to sell the local currency.
The kiwi touched 95.75 Australian cents and was trading at 95.85 cents at 8am in Wellington, from 96.43 cents at 5pm on Friday. The local currency was trading at 75.20 US cents from 75.18 cents at the New York close and 75.31 cents on Friday.
The New Zealand dollar has been steadily gaining ground against the Aussie this year as investors favour the outlook for the local economy, where interest rates are expected to remain on hold at 3.5 per cent, compared with a weaker outlook in Australia where record low interest rates of 2.25 per cent may decline further. Still, some investors are betting the kiwi's rise to a post-float high of 97.07 Australian cents last Thursday night may not be warranted.
"The strong reversion after Thursday's new post-float high indicates reluctance to drive this cross too much further at this stage," ANZ Bank New Zealand senior FX strategist Sam Tuck and agri economist Con Williams said in a note.
ANZ expects the kiwi to trade between 95.60 Australian cents and 96.40 cents today.
In New Zealand today, the Reserve Bank releases data on credit card spending for January, at 3pm.
Traders are looking ahead to US Federal Reserve chair Janet Yellen's semi-annual testimony to US lawmakers this week as they assess when interest rates will start to rise in the world's largest economy.
Yellen's comments on monetary policy and the state of the US economy follow the release of January's policymaker meeting minutes which showed that the majority of the Fed's open market committee's members are in no rush to increase rates. She is set to testify on February 24 and again the next day. Most investors continue to position for higher US rates at some point this year.
"Expect a quiet start to the week, as markets wait to hear Fed Chair Yellen's thoughts, Tuesday night," ANZ said.
In New Zealand this week, the focus is on an update to Fonterra Cooperative Group's milk price forecast for the 2014/15 season, which ANZ expects may be released as early as tomorrow morning at 8:30am, following a board meeting. Some agricultural economists expect the forecast to rise from the current $4.70 per kilogram of milk solids following gains in recent GlobalDairyTrade auctions.
The New Zealand dollar slipped to 65.99 euro cents from 66.24 cents on Friday as a four-month "bridging arrangement" was agreed in Greek debt negotiations. The Greek government must submit a list of economic measures it intends to carry out under the four-month extension and its EU partners must agree that they are adequate enough.
The kiwi was little changed at 48.81 British pence from 48.80 pence on Friday, and edged higher to 89.65 yen from 89.52 yen. The trade-weighted index declined to 77.99 from 78.12 on Friday.