The New Zealand dollar rose against the greenback overnight, as more soft data out of the US forced investors to re-evaluate bets on the likelihood of further quantitative easing from the Federal Reserve.
The kiwi recently traded at US81.05 cents, up from US80.62c at 5pm yesterday, while on the Trade Weighted Index of major trading partners' currencies it rose to 72.97 from 72.81.
A softer Philadelphia Fed survey and a rise in US unemployment claims tilted market expectations back towards further monetary policy from the Fed, with investor turning bearish on the greenback.
Quantitative easing, which effectively amounts to printing more money, tends to weaken a currency as more supply comes into the market.
Sentiment also tipped in favour of the euro on rumours Spain was prepared to accept greater fiscal reforms in exchange for the European Central Bank stepping in an buying its bonds to stabilise spiralling debt costs.
"The US dollar was weak overnight as data overall disappointed," said ANZ's currency desk in a report. "The New Zealand dollar was the strongest of the commodity currencies losing only to the euro which was boosted by market rumours of imminent plans to solve Spanish issues."
New Zealand's Producer Price Index data will be released today, although any effect on the kiwi is likely to be minimal. Outside of that, data flows look light and markets are likely to trade on sentiment and speculation.
On the crosses, the New Zealand dollar recently traded at 77.02 Australian cents, up from 76.92 yesterday, and it rose to 64.28 yen from 63.92 yen. The kiwi slipped to 65.60 euro cents from 65.66 euro cents at 5pm, and edged higher to 51.52 pence from 51.45 pence.
The kiwi may trade between US80.90c and US81.40c today, according to ANZ, with the currency likely to test the upper end of the range during the Asian trading day.
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