The New Zealand dollar rose after minutes to the last Federal Reserve policy meeting showed an interest rate hike was still on the cards next month without offering more guidance, prompting some traders to cash in on their bets on the greenback.
The kiwi gained to 65.31 US cents at 5pm in Wellington from 64.35 cents at 8am, and up from 64.65 cents yesterday. The trade-weighted index advanced to 71.15 from 70.77 yesterday.
The US dollar index, a measure of the greenback against a basket of currencies, fell from an eight-month high after minutes to the Federal Open Market Committee reaffirmed investors' expectations for higher interest rates next month. The greenback gained about 6.1 per cent since the October meeting on the prospect of the US's zero interest rate policy coming to an end, and some investors took the opportunity to cash in those gains after the minutes stuck to the official statement last month.
"People have been pushing the US dollar higher all through this week, especially against the euro and kiwi, pretty much holding their positions going into the minutes," said Raiko Shareef, currency strategist at Bank of New Zealand in Wellington.
"This is a bit of short-term consolidation for the US dollar - the kiwi has been an out-performer, but I'd expect sellers to come through."
