Solid data out of New Zealand, including today's lift in the October manufacturing performance index, has led investors to pare back on so-called 'short' kiwi dollar positions, which had been running at record levels for the past several months.
When positioning is short it means traders are selling the kiwi in the expectation it will fall and can be bought back at a lower price.
The strong data has led investors to pare back their expectations that New Zealand's central bank might move to cut interest rates, making the kiwi more attractive.
Mark Johnson, a private client manager at OMF, said tomorrow's US Commodity Futures Trading Commission data will provide a steer on whether those short positions are continuing to unwind.
"The way the kiwi has held up over this last week would imply those short positions have been pared back," he said.
The kiwi also remained firm against the British pound on Brexit uncertainties as several ministers resigned saying they couldn't support the plan. It traded at 53.33 British pence from 52.26 pence late Thursday. It was at 60.17 euro cents from 59.99 euro cents.
Johnson said, however, the main focus is now on the upcoming G20 meeting at the end of this month, where US President Donald Trump and Chinese leader Xi Jinping are due to meet.
"The outcome of that could be key to determining the fate both New Zealand and the Australian dollar," he said. The NZ dollar traded at 93.84 Australian cents from 93.44 cents Thursday.
The New Zealand dollar was at 4.7352 Chinese yuan from 4.6913 yuan and at 77.35 yen from 76.97 yen.
New Zealand's two-year swap rate was unchanged at 2.17 per cent; the 10-year swaps were down three basis points at 3.01 per cent.
