Kiwi dollar peaks just shy of US74c

The New Zealand dollar reached a 14-month high against the greenback just short of US74c before falling away as the United States currency gained broadly.

Optimism following Australia's interest rate hike on Tuesday fizzled out and traders said the greenback's recent decline was overdone.

By 8am the kiwi was buying US73.33c, little different from its level at 5pm yesterday, having climbed as high as US73.97c around 10pm, according to Reuters data.

The NZ dollar also reached a 16-month high against the European currency at 0.5024 euro, then fell away to be 0.5 euro at the local open, slightly ahead of its level at 5pm.

BNZ Capital strategist Mike Jones said currency markets were "a little volatile" last night.

Early on, weakness in the US dollar continued as media reports about the likely reducing role of the greenback as the world's reserve currency continued to circulate, said Jones.

Combined with some modest gains in commodity prices, that saw growth sensitive currencies outperform.

Rumours of an option barrier around US74c meant the NZ dollar struggled to hold onto its gains against the US currency, while a late rally in the greenback also weighed on the kiwi.

Recent strength of the NZ dollar against the greenback had tended to outstrip economic fundamentals, said Jones.

The kiwi remained in a narrow range against the Australian dollar overnight, and at 8am was at the same level as at 5pm -- A82.54c

The NZ dollar also slipped to 65.01 yen at the local open from 65.17, and was just above 46p, having reached a 25-year high 46.55p overnight. The trade weighted index was 66.37 at 8am from 66.42 at 5pm.

- NZPA