The kiwi broke through the key US45.50c level yesterday but failed to provide the expected fireworks as a result.
At 5pm the kiwi closed near its highs at US45.65c from US45.39c at Monday's close, while the aussie was at US54.73c this morning from US54.55c late Monday.
The trade-weighted index (TWI), which measures the kiwi against a basket of major currencies, soared to a two-year high of 54.05.
Bank of New Zealand currency strategist Stu Ritson said the kiwi had reached a fresh 22-month intraday high of US45.66c, and was likely to stretch higher overnight.
"It has made fresh up-leg highs which has added a bit of interest, but overall it's been very quiet and the kiwi's been following the aussie.
"The US dollar's been performing slightly better this week and the kiwi and aussie have remained fairly well-bid," Mr Ritson said.
"Clearly the focus will be the Reserve Bank's Monetary Policy Statement (today), and with a high chance of it raising the Official Cash Rate by 25 to 50 basis points the yield story is alive and well, and these currencies remain well-supported."
The kiwi's break through the key US45.50c level had been expected to give it some momentum to shoot sharply higher, but instead it was just slowly grinding upwards. It was unlikely to breach the strong US45.90c level tonight.
"It's an aussie story and that's the reason the kiwi's been dragged along the last 24 hours," Mr Ritson said.
The US45.40/50c level provided strong support on the down-side.
HSBC said yesterday it was picking the kiwi will tackle US46c by the end of the week as investors reward the Reserve Bank's tough stance on rates.
The kiwi had risen against all the major currencies by 5pm to trade at A83.39c (A83.20c at Monday's close), 0.5023 euro (0.4965), 58.55 yen (57.79), 31.38 pence (31.02) and 0.7306 Swiss francs (0.7223).
The aussie was buying $NZ1.1990 ($NZ1.2014).
The monetary conditions index was at minus 391 (minus 431) and 90-day bank bills were steady at 5.834 per cent.
On the debt market, the April 2004 bond yields were at 6.19 per cent (6.17), the November 2006s were at 6.69 per cent (6.70), and the November 2011s were at 6.89 per cent (6.87).
- NZPA
<i>Currency:</i> Kiwi breaches US45.50c but fails to storm higher
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