KEY POINTS:
The New Zealand dollar has passed the US80c mark again, but currency watchers believe further overseas woes, the softening local housing market and drought conditions are likely to drag the kiwi off its perch before long.
The kiwi climbed above US80c early today for the first time since July, travelling in the slipstream of its muscular Australian counterpart.
The high-yielding aussie and kiwi climbed overnight as gains in global equities and commodities bolstered investor appetite for risky trades.
Bank of New Zealand currency strategist Danica Hampton said demand for the kiwi was largely driven by speculators, who last week took short-term bets it would fall, having to give up those positions.
She said it was "difficult to get excited" about the kiwi's latest move higher and remained cautious about its near-term outlook against the greenback.
"Not only are there still considerable risks to global growth, but credit crisis concerns continue to hang over equity markets."
This week US inflation data and earnings reports from several large European banks may send the kiwi lower. "Locally, the combination of a crumbling housing market, slower household spending and concern about the drought conditions is also taking its toll on New Zealand dollar sentiment.
"There appears to be all sorts of problems within New Zealand property companies. It will be worth keeping an eye on this sector."
The NZ dollar got as high as US80.22c, its highest level since July when it topped US81c, its highest level in more than a quarter of a century. By 8am it was buying US79.94c.
- additional reporting by NZPA