The New Zealand dollar rose ahead of the release of local economic growth data, with global markets gaining after Federal Reserve Chairman Ben Bernanke hinted at a third round of quantitative easing should the US economy falter.
Global equities and commodities had a rapid shift in direction, snapping severaldays of declines after Bernanke told a congressional meeting that the central bank was ready to ease monetary policy further if the world's biggest economy continued to weaken.
The bounce in risk appetites saw increased demand for growth linked currencies such as the kiwi and Australian dollar.
On Wall Street, the Standard & Poor's 500 Index rose 0.3 per cent to 1,317.73, Europe's Stoxx 600 rose 0.7 per cent to 269.94, and the 19-commodity Thompson Reuters Jefferies CRB index rose 1.4 per cent to 349.17, its highest level in over a month.
"If the market thinks that QE3 is a high probability event then the US dollar will continue to be sold off and the kiwi could potentially strike higher," said Khoon Goh, head of market economics and strategy at ANZ New Zealand.
The government is set to finally release much delayed economic growth figures for the first quarter of this year, a period when a 6.3 magnitude earthquake destroyed much of Christchurch city.
The market is expecting the economy to have grown at a pace of 0.4 per cent in the three months, although the potential for volatility is high after the data release was last week delayed almost at the last minute.
"Should the number print in line with expectations that'll be seen as a positive by currency markets," Goh said.
The kiwi recently traded at 83.80 US cents, up from 82.27 cents yesterday, and rose to 71.10 on the trade-weighted index of major trading partners' currencies from 71.41. It rose to 77.72 Australian cents from 77.23 cents yesterday, and climbed to 65.99 yen from 65.28 yen. It rose to 59.06 euro cents from 58.69 cents yesterday, and gained to 51.88 pence from 51.56 pence previously.
Risk sentiments were also bolstered after Fitch Ratings said Italy's debt is sustainable provided the government sticks to its fiscal targets. The ratings agency affirmed the country's AA-minus credit rating with a stable outlook.
The kiwi may trade between 83.10 US cents and 84.25 cents, Goh said, with the bias towards the upside.
