KEY POINTS:
The New Zealand dollar held at five-week highs against the greenback and yen as it continued to strengthen after yesterday's big interest rate cut in the US.
That cut spurred the NZ dollar's largest one-day rise against the greenback in nine years, lifting 3c to be buying US73.12c at 5pm yesterday.
It strengthened at a much more gentle rate to hit US73.78c this afternoon before a little profit taking saw it ease to US73.55c at the close.
Against the Japanese currency, the kiwi rose to 85.28 yen from 84.71 at 5pm yesterday.
BNZ chief dealer Mike Symonds said demand was strong during New York trading and Tokyo names were active buyers.
He said momentum traders had been active and while the kiwi was taking a short breather, it could end the week stronger yet.
"The downside is limited," he said.
New Zealand posted a better than forecast $2.9 billion June quarter current account deficit, but Mr Symonds said the data was historical and attention was focused elsewhere.
ANZ bank said the US rate cuts had injected confidence back into global markets.
That had seen the return of the carry trade - in which investors borrow low interest rate currencies to invest in higher yielding assets - resulting in strong demand for the New Zealand and Australian currencies.
On the aussie cross, the kiwi ended easier on A85.62c from A85.73c yesterday while the trade weighted index rose to 69.89 from 69.52.
The US dollar moved sideways but held above a 15-year low against a basket of currencies as investors awaited testimony from Federal Reserve Chairman Ben Bernanke for more clues on monetary policy.
Sterling stayed under pressure after hitting a 17-month low against the euro the previous session as traders interpreted the minutes of this month's Bank of England meeting as signalling possible interest rate cuts in the future.
Reuters currency rates
5pm today 5pm yesterday
NZ dlr/US dlr US73.55c US73.12c
NZ dlr/Aust dlr A85.62 A85.73c
NZ dlr/euro 0.5266 0.5230
NZ dlr/yen 85.28 84.71
NZ dlr/stg 36.78p 36.31p
NZ TWI 69.89 69.52
Australian dollar US85.95c US85.29c
Euro/US dollar 1.3976 1.3980
US dollar/yen 115.85 115.84
- NZPA