KEY POINTS:
Thoughts last week's Reserve Bank decision not to hike interest rates would precipitate a downward trend in the kiwi dollar have proved unfounded to date.
The New Zealand dollar rose half a cent against its US counterpart in a two-hour burst in the early hours of this morning and ended today just shy of US67c -- over half a cent above its level before the RB decision.
The strength of the kiwi came as the greenback dropped to a one-month low against major currencies overnight after softer-than-expected October economic data spurred some doubt about US growth potential.
While the NZ dollar also made ground on other major currencies, the gains were not as pronounced as those against the US currency.
It closed on US66.95c, down from its 0.6738c high, but well ahead of yesterday's US66.50c close at 5pm yesterday.
It only rose to A86.49c from A86.42c yesterday. The Australian dollar firmed to US77.42c from US76.90c yesterday against the US unit.
The trade weighted index finished at 66.76 from 66.50 yesterday.
The overnight fall in the US dollar across the board came after the National Association of Purchasing Management-Chicago's October business barometer fell to the lowest level since August 2005. Separately, US consumer confidence also slipped slightly in October.
Despite the RB keeping the cash rate steady last week, the NZ-US two-year bond spread has actually widened about 5 basis points, making the kiwi more attractive to yield chasers.
"Over the past couple of days, there has been steady demand from a variety of offshore fund and leverage accounts," said BNZ stratetist Danica Hampton.
The US dollar hovered near one-month lows against the yen and the euro after weak business activity data for the US Midwest reinforced market expectations the Federal Reserve will keep interest rates steady for a while.
Traders said that demand for US dollars from Japanese importers would likely keep the currency supported above the mid-116 yen region during Asian trade.
The US dollar stayed on the back foot against the euro, with the single currency trading at $US1.2765 near a one-month high of $US1.2783 struck yesterday.
Rates:
5pm Wednesday 5pm Tuesday
NZ dlr/US dlr US66.95c US66.50c
NZ dlr/Aust dlr A86.49c A86.42c
NZ dlr/euro 0.5245 0.5228
NZ dlr/yen 78.33 78.13
NZ dlr/stg 35.06p 34.98p
NZ TWI 66.76 66.50
Australian dollar US77.42c US76.90c
Euro/US dollar 1.2761 1.2717
US dollar/yen 117.01 117.52
- NZPA