KEY POINTS:
The New Zealand dollar inched higher today on demand from domestic and offshore buyers, and looked set to travel higher.
By 5pm, the kiwi was at US70.10c, up from the US68.71c close on Friday. Dealers said it traded as high as US70.32c on Boxing Day.
"It basically traded a pretty narrow range all day," one dealer said. The kiwi stuck between US69.94c and US70.18c.
"There is good appetite for the kiwi, particularly below US70c, and we also saw the Aussie initially sold off, which brought the kiwi down slightly with it," he said.
"Overall there is demand out there for it. The market's view on the kiwi's changed quite dramatically in the last couple of months, and I think the market has this feeling that the kiwi will go higher."
Investors are betting the Reserve Bank could raise interest rates in the new year, even though data was mixed going into the Christmas break. The kiwi is trading around 11-month highs.
Trading was fairly quiet, although many markets around the world were open.
"The markets don't take a holiday anymore. The Japanese worked on Christmas Day, they worked on Boxing Day, the Americans work on Boxing Day -- there's liquidity out there in the currency, there's no doubt about that," the dealer said.
"We also notice that the domestic customers are out there as well. Christmas is not the same as it was 10 years ago in terms of closing up shop etc."
Against the Australian dollar, the kiwi was at A89.33c from the A88.75c close on Friday.
The US dollar slipped from near a two-month high against the yen as technical problems made trading difficult and on a media report that the Bank of Japan will probably discuss bumping up interest rates at next month's policy meeting.
Technical problems with some dealing systems and news terminals in parts of Asia meant that some market players were reluctant to trade.
The US dollar had crept up to a fresh two-month high against the low-yielding yen on Tuesday after lacklustre Japanese consumption and spending data kept doubts simmering about whether the BOJ would raise rates in January.
Reuters currency rates:
5pm today 5pm Friday
NZ dlr/US dlr US70.10c US69.71c
NZ dlr/Aust dlr A89.33c A88.75c
NZ dlr/euro 0.5340 0.5285
NZ dlr/yen 83.29 82.43
NZ dlr/stg 35.80p 35.43p
NZ TWI 69.25 68.70
Australian dollar US78.48c US78.54c
Euro/US dollar 1.3129 1.3188
US dollar/yen 118.82 118.27
- NZPA