The New Zealand dollar rose after better-than-expected US manufacturing data reignited investors optimism that the world's largest economy is on track, boosting demand for growth-linked assets such as the kiwi.
The New Zealand dollar rose to 81.56 US cents at 8am in Wellington from 81.47 US cents at 5pm yesterday. The trade weighted index increased to 72.42 from 72.35.
The Institute for Supply Management's index of US manufacturing rose to 54.8 in April, the highest level since June, up from 53.4 a month earlier. Economists in a Bloomberg survey had forecast a decline to 53. The data reduced bets the Fed will take more action to prompt economic growth.
The kiwi "is going to become a growth story again - people will be buying risk currencies on the back of that data," said Stuart Ive, currency strategist at HiFX. "The kiwi does have the potential possibility of looking to crawl back up for the rest of the week as we approach non-farm payrolls on Friday."
The kiwi has gained about 4 per cent against the greenback this year after Fed policy makers said they would hold off increasing monetary accommodation unless US economic expansion falters or prices rise at a slower rate. In January, it pledged to keep interest rates near zero until at least the end of 2014.