KEY POINTS:
The New Zealand dollar hit two-week highs against the greenback, yen and euro overnight while trading around seven-week lows against its Australian counterpart.
The kiwi reached US77.39c and 0.5363 euro around 9pm, before retreating to US76.88c and 0.5336 euro by today's close.
However, against a rampant aussie dollar, the kiwi fell as low as A83.20c before recovering to A83.62c, above yesterday's A83.45c close.
The Australian dollar powered up to a 23-year high of US92.72c, but ended the session easier on US91.02c.
Overnight, the greenback fell to record lows against the euro and a basket of major currencies for the second consecutive session as dealers bet the Federal Reserve will cut US interest rates this week and signal more cuts to come.
However, a report from the influential Wall Street Journal newspaper cast doubt on the rate cut theory, helping the dollar to pare losses.
The article by Greg Ip, the Journal's Fed watcher who is known for sometimes reflecting the views of senior central bankers, said policymakers view this week's decision as a choice between a quarter-point cut to 4.5 per cent and not moving at all.
Overall, sentiment remained bearish on the US dollar, with many analysts convinced that more rate cuts are needed to avert further deterioration in the housing sector and prevent a recession in the US economy.
That contrasts with somewhat stable conditions in other economies, particularly commodity exporters, whose currencies have been surging lately.
Currencies of commodity-producing countries, such as the Australian and Canadian dollars, and to a lesser extent the kiwi, are well supported with oil prices at record highs and gold prices at 28-year highs.
"While a weak dollar trend is expected to continue, Australian and Canadian dollars will likely benefit from their solid economic fundamentals and expectations for further rises in commodity prices," a trader at a Japanese bank said.
The ANZ bank said the kiwi was likely to benefit from higher commodity prices, but was more likely to be pulled higher by a stronger Australian dollar.
The trade weighted index closed on 71.25 from 71.32 at 5pm yesterday.
Reuters currency rates
4.45pm today 5pm yesterday
NZ dlr/US dlr US76.88c US77.05c
NZ dlr/Aust dlr A83.62c A83.45c
NZ dlr/euro 0.5336 0.5347
NZ dlr/yen 87.99 87.96
NZ dlr/stg 37.31p 37.50p
NZ TWI 71.25 71.32
Australian dollar US91.02c US92.35c
Euro/US dollar 1.4403 1.4411
US dollar/yen 114.52 114.17
- NZPA