KEY POINTS:
The New Zealand dollar powered above US72c today for the first time in 22 months.
Initially, it rose on the coat tails of a storming Australian currency, but the kiwi even made gains on the aussie.
Although it eased back from its US72.39c morning high to close on US72.18c, that was still half a cent higher than yesterday's close.
The Australian dollar backed off from a 10 year high of US81.83c to close on US81.53c, up from US81.30c at 5pm yesterday, while the kiwi-aussie cross rose to A88.52c from A88.21c.
The New Zealand dollar was strong across the board with the trade-weighted index rising to its highest close in 15 months at 70.32.
The Australian dollar rose after yesterday's much stronger than expected retail sales data, which had analysts predicting the Reserve Bank of Australia will hike interest rates as early as tomorrow.
ANZ predicted the "stunning" Australian data would give the aussie and kiwi dollars fresh wings.
However, BNZ currency strategist Danica Hampton said if the RBA did not hike rates, both Australasian currencies were vulnerable to a sharp pull back.
The kiwi broke back above 85 Japanese yen, having been above that level a month earlier before Chinese stock prices had their largest daily fall in a decade and investors became wary of risk.
In major currency trading, the US dollar held steady against the euro and yen.
The Bank of England is expected to hike rates this week -- to 6.5 per cent -- underpinning sterling.
By contrast, the dollar has suffered as market players believe a US slowdown will prompt the Fed to cut rates from the current 5.25 per cent as often as twice this year, thereby dulling the US currency's yield appeal.
Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US72.18c US71.69c
NZ dlr/Aust dlr A88.52c A88.21c
NZ dlr/euro 0.5400 0.5366
NZ dlr/yen 85.03 84.40
NZ dlr/stg 36.49p 36.41p
NZ TWI 70.32 69.91
Australian dollar US81.53c US81.30c
Euro/US dollar 1.3365 1.3361
US dollar/yen 117.88 117.72
- NZPA