The New Zealand dollar fell against its Australian counterpart on growing consumer confidence across the Tasman, and declined against the greenback on weaker commodity prices.
The kiwi dropped to 91.10 Australian cents as at 5pm in Wellington from 91.54 cents yesterday. It fell to 72.54 US cents from 72.91 cents yesterday.
The Aussie was boosted by figures showing Australian consumers were increasingly optimistic, soothing concerns a slowdown in spending could weigh on the economy this year.
The Westpac-Melbourne Institute Index of Consumer Sentiment rose 1.8 per cent to 105.1 in January, its highest level since late 2013. In New Zealand, consumer confidence dropped sharply in the December quarter while businesses have grown increasingly pessimistic about the local outlook.
In Australia, "the further rise in the Westpac measure of consumer confidence in January adds to the recent run of encouraging news about the health of the household sector and suggests that the risks to our forecast that consumption growth will remain around 2 per cent this year are firmly on the upside," Capital Economics said in a note.
The kiwi has "come off as we see a little bit of divergence in the data" between Australia and New Zealand, said Ross Weston, a senior trader at Kiwibank.
Weaker commodity prices weighed on the kiwi against the greenback, with the TCRB index of 19 commonly traded commodities falling 0.5 per cent, while domestically the ANZ commodity price index showed a 2.2 per cent decline in prices for locally produced raw materials.
Weston said the kiwi "found a high around that 73 (US cents) mark and now its slowly sort of rolling south," as commodity prices - including oil - fell as investors crystallised profits from recent gains. In the short-term, Weston expects the kiwi to trade between 72 US cents and 73 cents "and wait for the next domestic or offshore move."
Investors will be watching for the Bank of Canada policy review later in the global trading day. The BOC is expected to hike the benchmark interest rate a quarter-point to 1.25 per cent "and the market is starting to group the Reserve Bank of New Zealand with the Bank of Canada as banks that will need to be more hawkish so investors will be keeping an eye on that announcement," Weston said.
New Zealand's two-year swap rate was unchanged at 2.21 per cent while the 10-year swap declined 1 basis point to 3.20 per cent.
The trade-weighted index fell to 74.69 from 75.07 yesterday and the kiwi declined to 4.6650 Chinese yuan from 4.6848 yuan. The local currency fell to 59.15 euro cents from 59.47 cents yesterday and decreased to 52.61 British pence from 52.88 pence. The kiwi declined to 80.24 yen from 80.89 yen yesterday.