The Australian dollar is slightly lower, weighed down by profit taking and a lower iron ore price.

At 0700 AEST on Monday, the local unit was trading at 93.98 US cents, down from 94.14 cents on Friday.

The currency is backing away from the one month high of 94.39 US cents, reached early on Friday morning, after May’s local unemployment rate stayed steady and the Reserve Bank of New Zealand raised its cash rate.

Brown Brothers Harriman global head of currency strategy Marc Chandler said the Australian dollar’s strength last week surprised him.

He said the currency most likely would lose ground this week after its strong performance last week.

“A break now of 93.70 US cents would likely signal a corrective phase rather than consolidation, in which case the next target would be around a cent lower,” he said.

National Australia Bank global co-head of foreign exchange strategy Ray Attrill said a falling iron ore price wouldn’t help the Australian dollar.

At the end of last week iron ore fell 60 cents to $US90.90 a tonne.

“The fresh 2014 lows for iron ore will grab some headlines Monday and could weigh on the Australian dollar,” he said.

The US Federal Reserve has its policy meeting this week which, Attrill said, would also put downward pressure on the Australian dollar.

He said the Fed was likely to announce a lift in its inflation forecasts, which could mean it will raise the federal funds rate as early as mid 2015.

AAP