The New Zealand dollar advanced as investors gained confidence that tensions in Ukraine were easing, stoking demand for risk-sensitive assets.
The kiwi rose as high as 84 US cents early this morning and was trading at 83.73 cents at 8am in Wellington, from 83.64 cents at 5pm yesterday. The trade-weighted index increased to 78.72 from 78.60 yesterday.
Global risk appetite returned after Russian president Vladimir Putin told a news conference he saw no need to use military force in Ukraine's Crimea region for now. The apparent easing of tensions pushed up European and US equities and US interest rates while damping demand for gold and oil.
"The New Zealand dollar is slightly stronger against the US dollar, helped by rebounding global risk appetite," Bank of New Zealand currency strategist Raiko Shareef said in a note. "With a dearth of data releases overnight, markets were driven mostly by developments in Ukraine. We remain cautious on this risk rally, as developments still have some way to run."
The New Zealand dollar advanced to 85.56 yen from 84.98 yen yesterday as investors reduced their holdings of the safe haven Japanese currency.
Dairy prices fell 4 per cent on a trade-weighted basis, with a 5.7 per cent slide in the price of whole milk powder on Fonterra Cooperative's GlobalDairyTrade auction. The sale comes after government figures showed the New Zealand's terms of trade gained 2.3 per cent in the fourth quarter, to the highest level since December 1973, driven by dairy products.
"Fonterra's GlobalDairyTrade auction overnight showed a modest fall in prices from the previous auction a fortnight ago but are still strong by historical standards," Peter Cavanaugh, client adviser at Bancorp Treasury Services said in a note.
In New Zealand today, data on fourth quarter building work will be released at 10:45am.
In China, traders will be looking for updated 2014 growth targets as the National People's Congress annual meeting begins today. Also of interest, the Chinese HSBC/Markit PMI Services Index for February will be released at 3:45pm New Zealand time.
The kiwi was little changed at 93.63 Australian cents from 93.67 cents yesterday after the Australian central bank yesterday kept its benchmark interest rate on hold as expected and retained its neutral bias.
Today, Australia publishes its fourth quarter GDP data at 1:30pm New Zealand time which is expected to show a tick up in growth.
The local currency increased to 60.98 euro cents from 60.91 cents yesterday and was almost unchanged at 50.22 British pence from 50.21 pence.