The New Zealand dollar rose above 71 US cents for the first time since early March after weak US data raised doubts about further Federal Reserve interest rate hikes after one expected in June.
The kiwi dollar traded at 70.94 US cents as at 8am in Wellington, and earlier touched 71.01 cents, from 70.46 US cents late yesterday. The trade-weighted index rose to 76.69 76.31 yesterday.
The US core PCE price deflator rose 1.5 per cent year on year, meeting market expectations but also the lowest annual inflation in about 18 months, while the Conference Board measure of consumer confidence fell for a second month in May. Locally, the release of the Reserve Bank's financial stability report at 9am will be an early focus for traders.
"Despite inflation heading in the opposite direction to the Fed's target, the market still has high conviction that the Fed will hike rates next month," said Jason Wong, currency strategist at Bank of New Zealand, in a note.
"But beyond June the outlook becomes murkier and the Fed funds curve only has a modest upward slope."
