The kiwi raced to new two-year highs today, climbing nearly one US cent and dealers said it was poised to smash above US50 cents.
The kiwi also flexed its muscles against the Australian dollar and at A86.42c was just shy of a four-year high.
The Australian dollar's strength against the US dollar initially gave the kiwi its lift but once it broke the old high of US49.49c it found more strength than the aussie.
Stop losses buying was triggered and it hit a high of US49.75c before closing just below US49.60, well up on yesterday's close of US.48.85c.
"Obviously 50 cents is looking fairly attractive and if it breaks that level we will see even more buying," Westpac dealer Mike Burns said.
ANZ chief dealer Mike Hindley said it was really a weak US dollar story as investors abandoned US assets and looked for alternatives.
"Definitely 50 cents is the target now," he said. "Everyone is moving out of the US and finding other markets to invest in."
Bank of New Zealand chief currency dealer Mike Symonds said the kiwi performed strongly overnight on a combination of a sharply increased US trade deficit and continuing tensions in the Middle East.
The US dollar was slammed overnight by a record US trade gap in April and first quarter current account deficit data that catapulted the euro to a two-year high above 96 US cents, and put its gains for the year against the dollar above 8 per cent.
The Australian dollar closed at US57.42c against yesterday's US56.69c.
The greenback fell sharply across the board as record-breaking data means it will take even more capital to flow into the US to make up for dollars sent abroad to purchase imports demanded by a US economy on the rebound.
"While the kiwi may not initially breach (US50c), we think it's only a matter of time before we see this kiwi push to the top side," said Mr Symonds.
"The kiwi's still finding good demand from a broad range of clients, both onshore and offshore, and given the US dollar environment out there the kiwi's going to continue to be a strong performer against the US," he said.
On the crosses, the kiwi closed at A86.42c (A86.20c at yesterday's close), 61.20 yen (60.57), 33.05 pence (32.75), 0.7544 Swiss francs (0.7504) and 0.5132 euro (0.5102).
Against the kiwi, the aussie was buying just $NZ1.1571 ($NZ1.1603).
On the money market 90-day bills closed on 6.00 per cent (5.99), the trade-weighted index ended at 56.94 (56.35) and the monetary conditions index tightened to minus 115 (minus 165).
The April 2004 bonds closed at 6.01 per cent (5.97), the November 2006 bonds were unchanged at 6.36 per cent, and the November 2011 bonds were at 6.58 per cent (6.53).
- NZPA
<i>Currency:</i> 50 US cents here we come, says Kiwi traders
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