The New Zealand dollar began the new month with a US1c fall.
The US dollar powered ahead against other currencies today on growing expectations the Federal Reserve will raise interest rates again this month.
Minutes released on Wednesday from the Fed's May 10 meeting showed that policy makers were not sure how much higher rates should climb, if at all, but a mention that inflationary pressures were increasing helped boost expectations that rates would rise.
"The sentiment for the dollar looks strong," said a trader at a major Japanese bank.
The kiwi closed on US63.26c -- a cent lower than yesterday's close. Against the Australian dollar it ended here on A84.40c from A84.13c.
ANZ Investment Bank said that despite offshore buying yesterday the New Zealand dollar was unable to hold gains against the greenback as sellers saw US64.20c as a strategic level to put in place short positions.
The kiwi had received some support from the issuance of $500 million of uridashi bonds, the first large New Zealand dollar uridashi issuance since early March, ANZ said.
Against the Australian currency, underlying support for the kiwi on a yield basis was starting to provide a firm base.
The trade-weighted index fell to 63.10 from 63.63 while the Australian dollar close US74.93c from US76.36c yesterday.
The local market is starting to focus on Thursday's Monetary Policy Statement. Goldman Sachs JBWere economist Shamubeel Eaqub expects the Official Cash Rate to be left at 7.25 per cent and the bank's statement to repeat the mantra of "no scope for rate cuts this year" due to persistently high inflation and the risk of contagion to inflationary expectations.
Rates:
5pm today 5pm Wednesday
NZ dlr US63.26c US64.24c
NZ dlr/Aust dlr A84.40c A84.13c
NZ dlr/euro 0.4950 0.4986
NZ dlr/yen 71.20 72.02
NZ dlr/stg 33.89 34.08
NZ TWI 63.10 63.63
Australian dollar US74.93c US76.36c
Euro/US dollar US1.2776 US1.2875
US dollar/yen 112.58 112.13
- NZPA
<i>Currency:</i> Dollar drops over US1c
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