KEY POINTS:
The New Zealand dollar topped US59c for the first time in five weeks but it was really a US dollar story.
The US dollar dropped to a two-and-a-half-month low against the euro and was around its weakest level in 13 years against the yen in an ongoing reaction to the Federal Reserve's big cut in interest rates this week.
"What we're seeing is a reaction to the (US) dollar as a consequence of the realisation that effectively the Federal Reserve is prepared to flood the system with liquidity and we've pretty much gone to a zero interest rate structure," said Tom Fitzpatrick, global head of FX strategy at CitiFX in New York.
By 5pm today the NZ dollar was buying US59.30c, having briefly spiked to above US59.50c from US58.05c at 5pm yesterday. It has moved up from around US54c in the last four days.
The kiwi also climbed to its highest level in two weeks against the Japanese currency, briefly getting above 52 yen. By 5pm the kiwi was at 51.90 yen, from 51.50 at yesterday's local close.
The NZ dollar was looking a bit stretched in the short-term, said Imre Speizer, senior market strategist at Westpac.
"I still think it is going to go higher over the next two weeks but on the day it has done a lot of work," he said.
"It is due a breather," he said.
Next week will be interesting as activity should reduce ahead of the Christmas holiday break but gross domestic product and current account data is due.
Against the Australian dollar, the kiwi reached a three-week high around A84.80c overnight. It dropped to A84.20c by the local close but that was still well ahead of A83.40c yesterday.
The NZ dollar was little changed against the euro at 0.4110, while the trade weighted index rose to 56.58 at 5pm from 55.94.
- NZPA
