KEY POINTS:
Stronger than expected retail sales data bolstered the chances of another interest rate hike, sending the New Zealand dollar to a fresh 23-month high.
The kiwi hit a high of US73.58c, just a US cent below its post-float high two years ago.
It range-traded about 50 basis points during the session, closing at US73.45c, compared with US72.65c the day before.
Much of the kiwi's recent strength has been underpinned by a firm Australian dollar, which rose to US83.18c against US82.42c yesterday, on softer US employment data.
A Deutsche Bank strategist said the Australian dollar could reach close to US85c in coming weeks.
The kiwi/aussie cross was A88.31c (A88.14c) , and the trade weighted index gained half a per cent to 71.20 compared with 70.72.
Some analysts have tipped the New Zealand dollar to rise above US75c after today's retail sales, which showed seasonally adjusted sales for March jumped 1.9 per cent on previous month, well above market forecasts of a 0.5 per cent increase.
Core sales, excluding motor vehicle and fuel sales, rose 2.3 per cent, against expectations of 0.6 per cent.
"It's obviously going to put more pressure on the Reserve Bank at the end of the month," ANZ Bank chief investment officer Murray Hindley said.
"Certainly the market is starting to price in another hike at the end of the month."
In the shorter term, Westpac currency strategist Michael Gordon thought the kiwi would test US74c overnight.
Offshore, the euro rose to a record high against the yen and a two year high against the greenback on expectations that euro zone interest rates will soon rise.
Dealers said the markets were now looking towards the weekend's G7 meeting of finance minister s, which was expected to call for flexible currencies, with the hope of boosting Asian currencies.
Since these currencies were mostly free-floating, the only way they could increase was for the US dollar to soften, Mr Gordon said.
5pm today 5pm Thursday
NZ dlr/US dlr US73.45c US72.65c
NZ dlr/Aust dlr A88.31c A88.14c
NZ dlr/euro 0.5438 0.5416
NZ dlr/yen 87.30 86.62
NZ dlr/stg 37.06p 36.80p
NZ TWI 71.20 70.72
Australian dollar US83.18c US82.42c
Euro/US dollar 1.3508 1.3417
US dollar/yen 118.85 119.24
- NZPA