The New Zealand dollar was trading higher as a no-deal Brexit looks less likely and as markets were cheered by better news out of Hong Kong.

The kiwi was at 63.59 US cents at 8am in Wellington from 63.34 cents at 5pm. The trade-weighted index was at 70.92 points from 70.82.

"A reduction in global political tensions saw a risk-on tone filter back into markets," said ANZ Bank FX/Rates strategist Sandeep Parekh.

Concerns that Britain might crash out of the UK on Oct. 31 eased when opposition lawmakers backed a bill that will oblige Prime Minister Boris Johnson to request an extension beyond Oct. 31 if a deal hasn't been reached by then. The bill now passes to the upper house of parliament.

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The kiwi was trading at 52.03 British pence from 52.33 pence after the news but further volatility is expected as Johnson has put forward a proposal for an election on Oct. 15. That proposal, however, also requires a vote. According to Reuters, the leader of the opposition Labour Party, Jeremy Corbyn, wants an election but won't vote for one until the bill gains royal assent - a step that could happen on Monday.

Global sentiment also got a lift when in Hong Kong, chief executive Carrie Lam said she would formally withdraw the extradition bill that has sparked months-long demonstrations.

The kiwi also benefited from news Wednesday that activity in China's services sector expanded at the fastest pace in three months in August as new orders rose, according to a report by Market Economics.

"There are plenty of reasons to be cautiously optimistic," Kiwibank trader Mike Shirley said.

The New Zealand dollar was trading at 93.54 Australian cents from 93.46, at 57.64 euro cents from 57.69, at 67.63 yen from 67.16 and at 4.5417 Chinese yuan from 4.5380.

- BusinessDesk