The New Zealand dollar gained strongly against the Australian dollar after Reserve Bank of Australia governor Philip Lowe opened the door to a rate cut.
The kiwi traded at 96.01 Australian cents at 8am in Wellington versus 95.25 late yesterday in New York and 95.07 Australian cents in Wellington on Tuesday at 5pm.
Wednesday was a holiday in New Zealand. It was at 68.30 US cents from 68.92 late yesterday in New York.
The Australian dollar took a tumble when Lowe gave a speech acknowledging growing economic risks and shifted away from the RBA's tightening bias.
The comments took the market by surprise after the RBA kept rates unchanged at 1.5 per cent on Tuesday and said inflation is still expected to return to target, although progress is likely to be gradual.
On Wednesday, however, Lowe told the National Press Club of Australia that "looking forward, there are scenarios where the next move in the cash rate is up and other scenarios where it is down.
Over the past year, the next-move-is-up scenarios were more likely than the next-move-is-down scenarios. Today, the probabilities appear to be more evenly balanced."
Marshall Gittler, chief strategist at ACLS Global, said prior to the comments the market was pricing in a 2.4 per cent chance of a hike versus a 36 per cent chance of a cut.
After the speech "the odds of a rate hike went to zero across the board, while the odds of a rate cut sometime this year jumped to 63 per cent," he said.
The kiwi was also supported when global dairy commodity prices lifted a stronger-than-expected 6.7 per cent to an average price of US$3,265 in the overnight Global Dairy Trade event, marking the fifth consecutive rise.
The focus will now be on December quarter domestic jobs numbers with economists expecting employment growth of 0.3 per cent and for the unemployment rate to rise slightly to 4.1 per cent.
ANZ Bank FX/rates strategist Sandeep Parekh said any positive surprises in the jobs data will give the kiwi a further boost against the Aussie ahead of next week's central bank monetary policy review.
The New Zealand dollar is trading at 52.76 British pence from 53.24 in New York Wednesday, at 60.08 euro pence from 60.37, at 75.11 yen from 75.78 and at 4.6059 Chinese yuan from 4.6470.
The trade-weighted index was at 74.00 from 74.06.