The New Zealand dollar eased against the US dollar today ahead of what may be a larger-than-expected fall in dairy prices this week and continued to wane against the euro as positive news out of Germany overshadowed any uncertainty around the Italian election.

The kiwi was trading at US72.22c at 5pm from US72.39c at 8am and US72.34c in New York on Friday. It traded at 58.60 euro cents versus 58.67 euro at 8am and 59.20 cents in Asia at the end of last week.

Milk price futures are pointing to a dip in this week's GlobalDairyTrade auction, timed for overnight Tuesday. The auction result tends to push the Kiwi dollar around as dairy exports still represent around 20-to-25 per cent of total exports. Martin Rudings, senior dealer at OMF, said milk price futures point to a 2 or 3 per cent decline and the risk is that prices could fall further, which will weigh on the New Zealand dollar.

The kiwi also continued to lose ground against the euro after German Chancellor Angela Merkel announced a coalition between her conservative party and the Social Democrats, ending months of talks.

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Rudings said the euro largely overlooked election uncertainty in Italy. According to Reuters, if early projections are confirmed, none of Italy's three main blocs or groups will be able to rule alone. However, previous elections in Italy have seen wild swings as the count proceeds.

Looking ahead, Rudings said investors will also be watching for Tuesday's rate decision in Australia where the central bank is expected to keep rates at record lows.

Investors will be watching to see if the central bank takes a defensive stance on potential trade wars after US President Donald Trump's announcement of tariffs on imported steel and aluminium. Trump's proposed new tariffs may have also helped the euro benefit from safe haven flows.

The trade-weighted index was at 74.36 from 74.48 on Friday in the US.

The kiwi traded at A93.16c from A93.08c at the end of last week and at 52.36p from 52.44p. It fell to 4.5737 yuan from 4.5865 yuan and eased to 76.26 yen from 76.48 yen.

New Zealand's two-year swap rate was unchanged at 2.19 per cent, and 10-year swaps rose 1 basis point to 3.19 per cent.