The New Zealand dollar fell to a three-month low against the Australian dollar as investors bet it has better prospects for gains than the kiwi.

The local currency touched 90.84 Australian cents and was trading at 90.90 cents at 8am in Wellington, from 91.64 cents at 5pm yesterday. The kiwi was little changed at 67.95 US cents from 67.96 cents yesterday.

The Australian dollar is more in favour than the kiwi as traders anticipate the Reserve Bank of Australia is likely to keep its benchmark interest rate on hold while New Zealand's central bank is seen cutting its benchmark rate further this year.

See live rates for the NZ-US $ below. Click for more information:NzForex Foreign Exchange Transfers

A pick-up in global risk appetite is also benefiting the Aussie more than the kiwi, helped by gains in iron ore prices, which jumped 19 percent overnight after Chinese officials at the weekend committed to supporting economic growth, boosting optimism about the outlook for steel and prompting traders to pull back on bets that iron ore would decline.


"Global sentiment has picked up and that usually benefits Aussie more than the kiwi," said Imre Speizer, Westpac Banking Corp senior market strategist in New Zealand.

"Iron ore has been doing pretty well and that boost last night just focused people who said we better go and buy some Aussie relative to kiwi. That is the trade to be on and it has been for about the last two weeks. It does look like it's going to break lower."

Westpac's Speizer expects the kiwi to head to 90 Australian cents in the next week or so, and move to 88 cents over the next few months.

In New Zealand today, Fonterra Cooperative Group is expected to update its forecast payout to dairy farmers, and fourth-quarter manufacturing data is released.

In Australia, business confidence data is published and Reserve Bank of Australia deputy governor Philip Lowe will give a speech on resilience and ongoing challenges.

Elsewhere, China publishes its February trade data.

The New Zealand dollar slipped to 61.73 euro cents from 61.83 cents yesterday, dropped to 47.62 British pence from 47.82 pence, and fell to 77.08 yen from 77.25 yen. It gained to 4.4273 yuan from 4.4254 yuan. The trade-weighted index declined to 72.97 from 73.09 yesterday