Another niggle is concern about the sabre-rattling in the US against Iran, including the news that National Security Adviser John Bolton had ordered the Pentagon to present options to send as many as 120,000 troops to the Middle East. President Donald Trump has said he doesn't want a war with Iran.
The kiwi was trading at 65.38 US cents from 65.37, down more half a cent from where it finished at 65.97 cents in New York on Saturday. The trade-weighted index was at 72.14 points from 72.04.
In the Australian election, the polls are indicating the government will change from a Liberal Party-led coalition with Scott Morrison as Prime Minister to a Labor government led by Bill Shorten, even though he is considerably less popular than Morrison.
"The Australian dollar probably won't react if Labor wins," says Derek Rankin at Rankin Treasury Services. "It will probably strengthen if the Liberals manage to hold on."
But regardless of the outcome, both the Australian and New Zealand currencies are under pressure and the market is pricing in a likely rate cut by the Reserve Bank of Australia in June, Rankin says.
But amid the trade concerns and the tensions with Iran, the overarching theme this week has been US dollar strength, he says.
While China will be looking at work-arounds to avoid the 25 per cent tariffs on US$200 million ($305.9m) of its exports to the US, they will bite in the short-term, he says.
But he dismissed talk that China might start selling its vast holdings of US Treasuries in retaliation to the US tariffs on top of the retaliatory tariffs it has imposed on US$60 billion of US exports to China.
"They've got so much investment in US Treasuries, where else could they put their money? If they take it back into yuan, that would strengthen the yuan" and the Chinese authorities currently want the yuan to weaken.
Yesterday, Bloomberg reported China's holdings of Treasuries fell in March to their lowest level since 2017, but it was only a slight reduction of $10.4b to $1.12 trillion.
The New Zealand dollar was trading at 51.09 British pence from 51.08, at 58.47 euro cents from 58.46, at 71.70 yen from 71.77 and 4.5113 Chinese yuan from 4.5982.
The New Zealand two-year swap rate fell to 1.5352 per cent from 1.5397 yesterday, while the 10-year swap rate edged up to 2.0650 per cent from 2.0600.
