Key Points:

The New Zealand dollar soared towards a 15-month high today and when the local market closed was knocking on the door of US72c.

Climbing steadily against the greenback from mid-afternoon yesterday, the New Zealand dollar spiked up to US71.82c and closed just below that on US71.77c. That's up three quarters of a cent on yesterday's close.

Demand came from all quarters, ANZ said.

The kiwi received a further boost after data showed US sales of new homes for February dropped to the lowest rate since June 2000, boosting expectations of a US interest rate cut.

ANZ said a heavy local data flow this week, including balance of payments on Thursday and GDP on Friday, was expected to be relatively strong and could see the kiwi continue to be well bid.

Aided by the strength of the Australian dollar, the NZ dollar was set to take out topside resistance and start attacking US72c, ANZ said.

Sellers at that level could cap further gains, but with New Zealand's GDP data release, a push higher looked likely by the end of the week, if not earlier.

Economists are forecasting GDP rose 1.0 per cent in the December quarter, which would lift the annual growth rate to 2.4 per cent.

The NZ dollar also firmed against other major currencies, even picking up nearly half a cent against the strong Australian dollar to end on A88.62c.

The trade-weighted index rose above 70, finishing on 70.09 from 69.55 yesterday.

The US dollar stayed near overnight lows against most major currencies in the wake of the new homes report.

"Monday's data was a big disappointment to the market, which was about to turn optimistic over US subprime loan problems," said Kengo Suzuki, a currency strategist at Shinko Securities.

The euro was little changed from late in New York at US$1.3325 after rising to US$1.3347, near the two-year high of US$1.3412 hit last week.

Monday's comments from policymakers of the European Central Bank helped firm market expectations for more euro zone interest rate hikes this year, and gave a boost to the single currency.

The Australian dollar closed at US80.97c after rising above US81c for the first time in 10 years in the previous session.

Reuters currency rates:

5pm today 5pm yesterday
NZ dlr/US dlr US71.77c US71.03c
NZ dlr/Aust dlr A88.62c A88.28c
NZ dlr/euro 0.5382 0.5352
NZ dlr/yen 84.74 83.75
NZ dlr/stg 36.43 36.22p
NZ TWI 70.09 69.55
Australian dollar US80.97c US80.46c
Euro/US dollar 1.3332 1.3276
US dollar/yen 118.11 117.88

- NZPA