The New Zealand dollar rose to its highest in more than a week against the Australian dollar as traders await the release of the minutes for the last Reserve Bank of Australia meeting for clues on whether more interest rate cuts are ahead.
The kiwi touched 96.60 Australian cents, its highest since March 5, and was trading at 96.52 cents at 8am in Wellington, from 96.27 cents at 5pm yesterday.
The local currency advanced to 73.78 US cents from 73.61 cents yesterday amid a broad-based US dollar decline on investor concern the greenback's strength may delay Federal Reserve interest rate hikes.
Traders are awaiting the publication of the Reserve Bank of Australia's minutes to its March 3 meeting when the central bank kept its benchmark interest rate on hold, following a cut to a record low 2.25 per cent at the February meeting.
The market is currently pricing in a 56 per cent chance of a rate cut at the RBA's April meeting, with interest rates expected to decline 54 basis points over the coming year, according to the Overnight Index Swap Curve.
"Today's local focus will be the release of the RBA's March minutes," Kymberly Martin, senior market strategist at Bank of New Zealand, said in a note.
"The market will be looking to see if the bank discussed cuts at that meeting and for guidance on timing of the next cut.
"Any comments that encourage markets in their pricing of an RBA cut at the next meeting would likely push the NZD/AUD higher.
However, we believe the market is likely already over-pricing the RBA's medium-term actions," she said.
The kiwi faces resistance around its recent high of 97.20 Australian cents, BNZ said. The kiwi touched a record 97.22 Australian cents on March 5.
The RBA minutes will be published at 1.30pm New Zealand time.
Tonight, the focus will be on Fonterra Cooperative Group's fortnightly GlobalDairyTrade auction.
The New Zealand dollar touched a fresh record of 70.13 euro cents overnight, and was trading at 69.71 cents at 8am in Wellington from 69.96 cents at 5pm yesterday.
The European Central Bank said it settled 9.751 billion euros of public-sector bond purchases in the first week of a programme to pump more than 1 trillion euros into the Eurozone economy.
The local currency edged lower to 49.73 British pence from 49.87 pence yesterday, ahead of tomorrow's release of the UK 2015 budget, the Bank of England minutes to its last meeting, and jobs data.
The kiwi advanced to 89.57 yen from 89.33 yen ahead of the Bank of Japan meeting today.