NZ currency: Dollar falls

The New Zealand dollar was weaker today as investors trimmed positions ahead of a Federal Open Market Committee meeting in the US.

A decline in US equities on Tuesday US time on profit-taking and heightened rising risk aversion after disappointing economic data from China was also a factor.

The US dollar rallied against commodity based currencies like the NZ dollar on the suggestion of weakness in China's economy.

By 5pm the NZ dollar was at US66.48c, down from US67.35c at the same time yesterday.

A statement from the Fed is expected at 6.15am tomorrow NZ time.

"The market is very divided on what they will say and that is creating a choppy markets," said Derek Rankin of Rankin Treasury.

"I think people are cutting positions back ahead of what could be a volatile outcome and that is creating weakness in the NZ dollar," he said.

Investors are looking for what the Fed says about its quantitative easing policy rather and a move in interest rates is not expected.

In the background are a number of themes, including whether the US dollar's rally on Friday on good US economic news was the start of a trend.

The NZ dollar has come back to 63.50 yen from 65.16 yen yesterday and to 0.4698 euro from 0.4768.

It was down against the Australian dollar to A80.60c at 5pm from A80.85c yesterday, while the trade weighted index fell to 62.24 from 63.09.

- NZPA