The New Zealand dollar consolidated overnight after falling below 65 US cents for the first time in six years yesterday as a slump in dairy prices and benign inflation stoked expectations of increased interest rate cuts.

The kiwi fell as low as 64.96 US cents late yesterday, and was trading at 65.09 cents at 8am in Wellington, from 65.17 cents at 5pm yesterday.

The trade-weighted index slipped to 69.14 from 69.26 yesterday.

The local currency weakened after prices for dairy products, the nation's largest commodity export, dropped more than expected at yesterday's GlobalDairyTrade auction amid global oversupply and weak demand.

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Data showing annual inflation of just 0.3 per cent in the June quarter stoked speculation the central bank could cut the official cash rate more aggressively than previously signalled, with some economists saying the rate could be cut as much as 50 basis points at next Thursday's review.

"The debate for next week's OCR meeting is between -25bps and the slight possibility of -50bps, and as ANZ expects only 25bps, risks of further downside surprises for NZD are diminishing," ANZ Bank New Zealand senior rates strategist David Croy and senior FX strategist Sam Tuck said in a note.

"Today should be about consolidation."

Today, inflation data is scheduled for release in the US and Canada, while the US also has a consumer confidence survey due.

A report yesterday showed US unemployment claims fell more than expected last week, stoking speculation the Federal Reserve may increase interest rates as early as September and boosting demand for the greenback.

The New Zealand dollar fell to 87.91 Australian cents from 88.53 cents yesterday, was little changed at 41.69 British pence from 41.71 pence, advanced to 59.84 euro cents from 59.62 cents and was little changed at 80.76 yen from 80.69 yen.