The US currency drew some support from a sharp rise in Treasury yields, which was not matched by Aussie bonds. While markets imply a greater risk of three rate hikes from the Federal Reserve this year, a first move by the Reserve Bank of Australia (RBA) is not fully priced in until November.
That divergence has seen yields on two-year Australian paper trade 18 basis points under the comparable US note, the widest such gap since mid-2000. The New Zealand dollar was up 0.1 percent at $0.7328, but still some way from the recent top of $0.7435.
It got a mild lift from figures showing the country's trade balance swung to a surplus of NZ$640 million in December, the largest since March 2015. Exports hit a record for the month, with earnings from dairy up a healthy 30 percent on a year earlier.
Australian government bond futures were mixed, with the 10-year contract down a tick at 97.1350. The three-year bond contract was steady at 97.730. Indeed, Australian yields out to five years are now below those in the United States, an even rarer event.
"However, it remains to be seen to what extent further Fed tightening can help to stabilise the plunging US dollar," noted Westpac's head of market strategy, Robert Rennie. "The dollar's decoupling from yield support has echoes of 2003-2004 when it similarly struggled to capitalise on rising yields as the "twin deficits" took hold." he said, referring to the country's budget and current account deficits.