KEY POINTS:
The New Zealand dollar hovered near 10-month highs ahead of Thursday's Reserve Bank interest rate review, at which the central bank is expected to talk tough but keep rates steady.
By 5pm, the kiwi was at US68.79c from US68.52c on Friday afternoon. The kiwi gained more ground against the Aussie, rising to A87.49c from A86.69c on Friday.
"The kiwi has climbed sharply over the past week, boosted by the combination of a generally weaker USD and renewed demand for NZ's relatively attractive yield premium," said Bank of NZ currency strategist, Danica Hampton.
The Reserve Bank is likely to be somewhat nervous about recent positive domestic data, including retail sales and the National Bank business confidence survey. But economists believe it is not enough to pull the trigger, leaving the official cash rate at 7.25 percent at present.
After its close on Friday, the kiwi had risen to a new trading range of US67.30c-US69.60c, ANZ Investment Bank said.
"Domestically, the RBNZ holds the key this week and with the door to a hike expected to remain open, we suspect the NZD is biased towards slow grinds higher," ANZ analysts said.
Aside from Thursday's rate review, domestic data this week includes the ANZ Commodity Price Index tomorrow, the September quarter wholesale trade survey on Wednesday, and construction data on Friday.
Recent US data has been weak, undermining the US dollar to the kiwi's advantage.
The US dollar fell to a fresh 20-month low against the euro, carrying over its weakness from Friday, when weak US factory data reinforced expectations for Federal Reserve rate cuts next year.
On Friday, the US currency slumped to a 14-year low against the British pound and a 20-month low against the euro after the Institute for Supply Management's survey of national manufacturing in November showed its key index at the lowest since April 2003, at 49.5. A reading under 50 indicates a contraction.
Reuters currency rates:
5pm today 5pm Friday
NZ dlr/US dlr US68.79c US68.52c
NZ dlr/Aust dlr A87.49c A86.69c
NZ dlr/euro 0.5164 0.5168
NZ dlr/yen 79.55 79.24
NZ dlr/stg 34.77p 34.84p
NZ TWI 67.30 67.10
Australian dollar US78.66c US79.03c
Euro/US dollar 1.3320 1.3259
US dollar/yen 115.64 115.60
- NZPA