Basking in good economic news, the New Zealand dollar reached multi-month highs against major currencies overnight as the greenback weakened further.

Data out yesterday showed a sharp fall in the current account deficit in the June quarter, followed by news of a raised Fonterra payout to dairy farmers.

The kiwi went above US72c for the first time in 13 months, peaking at US72.43c overnight, according to Reuters data, before easing to US72.04c by 8am today.

The NZ dollar also reached 0.489 euro, its highest level in 15 months, but slipped back to 0.4868 euro by the local open, similar to its level at 5pm yesterday.

The kiwi was also back where it started from against the Japanese currency at 65.72 yen by 8am, having peaked at an 11-month high around 66.05 yen.

Similarly against the Australian dollar, the kiwi reached a five-month high around A82.75c, but by today's local open was down to A82.47c.

A new 12-1/2-year high against sterling was reached, with the NZ dollar peaking at 44.36p, before easing to 44.05p this morning.

The trade weighted index was 65.44 at 8am from 65.35 at 5pm.

ANZ said it expected a more subdued performance by the NZ dollar today, with second quarter gross domestic product figures due at 10.45am.

The US dollar slid to a one-year low against the euro, just over US$1.48, as crumbling sentiment on the US currency prompted selling ahead of a Federal Reserve meeting and Group of 20 summit this week.

Traders took advantage of a US dollar rally in the prior session to sell on views the Fed will signal plans to maintain loose monetary policy well into 2010.

Currency investors are also eyeing a meeting of G20 leaders on rebalancing the global economy this week, a process that would almost certainly require a weaker US dollar.