The New Zealand dollar finished the day on its highs and was expected to continue forging ahead in the offshore session.
By 5pm, the kiwi had risen to US58.85c from last night's close of US58.39c, while the aussie was at US65.85c (US65.35c).
Murray Hindley, chief foreign exchange dealer at ANZ, said the kiwi looked set to break through the US59c level overnight.
"There's a weaker US dollar, stronger euro, stronger aussie.
"I think given the strong data we've had, being the employment data on Friday and June retail sales yesterday, people are suggesting the Reserve Bank won't move on September 4 and the offshore market's probably looking at the yield story again."
Economists have revised their forecasts from a 25-point cut in the 5.00 per cent Official Cash Rate when the central bank meets next month, to no change after recent indicators revealed a stronger than expected economy.
Recovering from a scare about vCJD, or the human version of mad cow disease, last week, the kiwi has benefited from impressive domestic retail sales and job ads data this week, and strong employment data last week showing New Zealand's unemployment rate at a 16-year low.
"It's propelled us a little higher during the day. The range has been US58.70/95c," Mr Hindley said.
In Tokyo, the US dollar bounced back from early Asian lows, recovering the losses seen after stronger-than-expected Japanese growth figures.
The US Federal Reserve will announce a decision on interest rates overnight, NZT, which is widely expected to be no change to the key official interest rate of 1.00 per cent.
In Wellington by 5pm, the euro had firmed to US$1.1359 from last night's close of US$1.1287c, while the US dollar was lower at 118.70 yen (118.83 yen).
On the crosses at 5pm, the kiwi was buying A89.38c (A89.34c last night, 69.85 yen (69.38), 36.64 pence (36.44), 0.7991 Swiss francs (0.7956), and 0.5182 euros (0.5173).
The Australian dollar was at $1.1183 ($1.1193).
The monetary conditions index was at plus 301 (275), the trade-weighted index was at 62.94 (62.61) and 90-day bank bill yields were unchanged at 5.14 per cent.
The February 2005 yields were steady at 5.29 per cent, the November 2006s were at 5.50 per cent (5.49), and the November 2011s were at 5.89 per cent (5.88).
- NZPA
<i>Currency:</i> Kiwi to continue forging ahead
AdvertisementAdvertise with NZME.