The New Zealand dollar climbed to a 20-month high against the greenback as equity markets rallied amid an early release of minutes to the last Federal Reserve policy meeting showing disagreement over the central bank's massive stimulus programme.
The kiwi gained to 85.74 US cents at 8am in Wellington from 85.24 cents yesterday, and the trade-weighted index extended its advance to 78.87 from 78.36.
Minutes from the March Federal Open Market Committee meeting were accidentally released early in Washington, and showed some members preferred bringing the quantitative easing programme of US$85 billion in monthly asset purchases to an end earlier than others. The flood of newly printed money from central banks has helped equity markets rally. The Standard & Poor's 500 index rose 1.2 per cent on Wall Street.
"All of this money out there is getting fed into equities and yielding currencies. The kiwi, unfortunately, is going to have to take it on the chin," said Stuart Ive, currency strategist at HiFX in Auckland.
The currency may trade between 85.40 US cents and 86 cents today, with Australian employment figures the biggest risk today, Ive said.
Economists expect the figures will show Australia lost 7,500 jobs last month, which may see the trans-Tasman currencies taper off, though Ive expects any pull-back to be "shallow." The kiwi increased to 81.28 Australian cents from 81.10 cents yesterday.
Reserve Bank head of prudential supervision Toby Fiennes will give a speech on prudential safeguards and minimising risks in New Zealand's banking system today. The central bank is looking at introducing new macro-prudential tools to rein in asset bubbles, and has singled out housing as a potential risk.
The BNZ-BusinessNZ performance of manufacturing index and February accommodation survey are scheduled for release today.
The kiwi advanced to 85.52 yen from 84.47 yen yesterday after Bank of Japan governor Haruhiko Kuroda said his plan to double the monetary base in two years should be enough to stoke inflation to an annual 2 per cent pace.
The local currency gained to 65.60 euro cents from 65.12 cents yesterday, and rose to 55.95 British pence from 55.60 pence.