The currency also weakened as Federal Reserve Chairman Ben S. Bernanke said central bankers will ``strongly resist'' any waning of public confidence in stable prices, adding to speculation U.S. policy makers will raise interest rates. New York Fed President Timothy Geithner said the bank is ``paying very close attention'' to the U.S. dollar.
The Australian dollar weakened 1.4 percent to 94.95 U.S. cents as of 4:34 p.m. in Sydney, from 96.26 cents late in Asian trading yesterday. The decline was the biggest since March 20. New Zealand's currency fell 1.4 percent to 75.65 U.S. cents, after earlier dropping to 75.51 cents, near a four-month low of 75.39 cents reached May 16.
Australia's currency also declined to its lowest in more than three weeks as a government report showed home-loan approvals slid for a third month in April, signaling two rate increases this year are slowing the economy.
Traders increased bets Fed policy makers will raise interest rates this year. Fed funds futures on the Chicago Board of Trade show a 32 percent chance policy makers will increase the target lending rate by at least a quarter-percentage point at their August meeting, compared with 9 percent odds yesterday.
Rising U.S. borrowing costs may curb demand for assets for the two South Pacific nations. New Zealand's benchmark rate is 8.25 percent and Australia's is 7.25 percent, compared with the Fed's target rate of 2 percent.
The number of loans granted to people to build or buy homes or apartments in Australia declined 3 percent from March, when they slumped 6.1 percent, the Bureau of Statistics said in Sydney today.