At 0700 AEST this morning, the local unit was trading at $US0.8916/23, down from Monday's close of $US0.8979/82.
Since 1700 AEST on Monday, the local currency traded between $US0.8918 and $US0.8998.
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Overnight, US stocks plunged over one per cent as a a government report showed consumer spending increased but not enough to rejuvenate the American economy.
The US Commerce Department reported that consumer spending rose 0.4 per cent in July and incomes rose 0.2 per cent.
Westpac New Zealand senior market strategist Imre Speizer said market sentiment was poor as a result of the data.
"There was weakness in the commodity currencies due to the weak US equities session," Mr Speizer said.
"We had a very weak close on US equities. It fell all session and that's the backdrop today.
"There were also some negative effects from the Bank of Japan yesterday," he said.
During the local session on Monday, Japan's central bank decided to ease monetary policy on a strong yen and growing political pressure to take action on the faltering recovery.
To boost liquidity, the Bank of Japan will expand a low-interest loan program for financial institutions to 30 trillion yen ($A393.59 billion) from 20 trillion yen ($A259.74 billion).
"The world was expecting them to come out with something significant in terms of stimulus," Mr Speizer said from Auckland.
"What they did announce was fairly minor."
Local economic data due on Tuesday include balance of payments, retail trade and building approvals.
"You've got a lot of Australian data out today which are very important. There's a lot of event risk around how the Aussie behaves on the day," Mr Speizer said.
"It does add a lot of potential for volatility."
The main overseas data due during the week are US non-farm payrolls on Friday night (AEST).
Mr Speizer forecast the Australian dollar to trade between $US0.8900 and $US0.9000 on Tuesday.
"Overall we have a negative bias on the Aussie dollar and look at it falling over the medium term," He said.
