The kiwi touched a fresh four-month low after the US Federal Open Market Committee kept the Fed funds rate unchanged, as expected, in a range of 1.5 per cent to 1.75 per cent but expressed confidence a recent lift in inflation would be sustained, adding to the view that it is on track to raise rates in June.
However, it pared some of those losses as investors await the US nonfarm payrolls data due Friday in the US.
"If it's a strong number, and it looks like it will be compared to the previous, it will allow them (investors) to buy the US dollar with a bit more confidence," said Martin Rudings, senior dealer foreign exchange at OMF.
Until then, he said the greenback will likely tread water as "it's a bit hard to be aggressively buying the US dollar at these levels when you have payrolls the next day."
Expectations are for unemployment to fall to 4 per cent from 4.1 per cent and a gain of 188,000 workers in April, according to Dow Jones Newswires. If the number is strong, the kiwi could dip below 69 US cents, said Rudings.
The kiwi is also under pressure against the Australian dollar after some strong data across the Tasman, including a wider than expected trade surplus in March and a lift in the number of approvals to build or renovate homes. It traded at 93.25 Australian cents from 93.42 cents late yesterday.
"Australia had some reasonable numbers today which have capped the kiwi/Aussie cross and that looks like it's set to move under 93.00 Australian cents" in the near term, said Rudings. He said the Aussie was also getting support from higher iron ore prices while dairy prices are weaker.
The kiwi dollar traded at 4.4653 yuan from 4.4593 yuan yesterday and at 51.60 British pence from 51.52 pence. It was at 76.93 yen from 76.95 yen.
New Zealand's two-year swap rate was unchanged at 2.27 per cent and 10-year swaps rose 5 basis points to 3.22 per cent.
