KEY POINTS:
The New Zealand dollar exploded above US76c on the weekend in yet another post-float high in last week's final session on overseas markets.
The kiwi climbed more than 1.5c from below US74.80c around 10pm on Friday to peak around US76.40c on Saturday morning (NZT). Around 8am today it was at US76.19c.
It was another first for the NZ dollar which went above US75c last week for the first time since being floated 22 years earlier.
The ANZ bank today said the rise in the NZ currency came as supply completely evaporated and illiquid conditions kicked in.
US dollar strength off the back of a lower trade deficit had failed to dent the kiwi.
Despite sharp rises in US yields during the past week, New Zealand interest rates had gone up even more, ANZ said.
It expected the NZ dollar to consolidate at current levels, but with first quarter terms of trade figures being released today likely to be strong, continued high demand for the kiwi was forecast.
The NZ dollar also hit highs against other major currencies, peaking above 0.5710 euro -- its highest level since February 2006 -- from 0.5623 at 5pm on Friday
Against its Australian counterpart, the kiwi topped A90.40c, its highest level since late January, from A89.52c on Friday evening.
Against the yen it hit a fresh multi-year high just under 93 yen, from 91.52, while the trade-weighted index was at 74.14 around 8am today, from 73.32 at 5pm Friday.
ANZ said markets were waiting for Japanese first quarter GDP data today, but significant strength was needed in those figures for any correction of sorts on the kiwi cross with the yen.
A run above 94 yen could not be ruled out this week as the market waited for the Japanese central bank's interest rate decision on Friday.
The US dollar hit a two-month high against a basket of major currencies on Friday (local time) as rising yields added to US Treasury debt's advantage over other major government bonds, drawing buyers looking for higher returns.
Data on Friday showing the US trade deficit narrowed in April reinforced views that the economy was improving after a weak first quarter, further weakening the case for rate cuts.
US interest rate futures now imply no cuts in benchmark borrowing costs this year and for most of 2008.
- NZPA
