The New Zealand dollar rose against all major currencies as European debt woes, softer global equities, and stronger commodity prices help the currency, while traders await local business confidence data.
Global equities retreated after investor risk appetites were dented on speculation that Portugal may be the next European country
to need a bailout, with market sources estimating that the package will need to be between 50 to 100 billion euros.
The similarities to the Irish debt crisis will have markets watching this week's debt sales closely with Portugal due to auction 2014 and 2020 bonds on Wednesday, while on Thursday Spain is auctioning 2016 bonds and Italy is due to auction 2026 government bonds as well.
"The health of the euro zone continued to drag down sentiment globally," said Mike Jones, markets strategist for Bank of New Zealand. "The market seems to have put Portugal firmly in the crosshairs as the next country that may need a bail out."
On the home front, the New Zealand Institute of Economic Research's Quarterly Survey of Business Opinion is due out this morning, with traders expecting a marginal improvement in core business indicators.
The kiwi increased to 76.41 U.S. cents from 75.93 cents yesterday, and gained to 69.28 on the trade-weighted index of major trading partners' currencies from 69.04.
It rose to A76.65 cents from A76.42 cents, and climbed to 63.22 yen from 63.17 yen previously.
It gained to 58.96 euro cents from 58.85 cents and rose to 49.02 pence from 48.96 pence.
The kiwi dollar drew some support from stronger commodity prices, which stoked demand for growth currencies, with the Thomson Reuters/Jefferies CRB index, a broad measure of 19 commodity prices, last trading 0.9 per cent higher at 326.83.
Jones said demand from China is likely to continue support commodity prices, with recent figures showing that imports grew 25 per cent in December over the same month a year earlier, reflecting the continued strength of the world's second biggest economy.
He said he expected the dollar to trade between a high of US76.80 cents and a low of US76.10 cents, provided business confidence numbers "don't offer any surprises".
