The New Zealand dollar rose along with a firm Australian dollar today as investors became more comfortable with risk as equity markets rallied.
Attention is also turning to next week's Reserve Bank of New Zealand (RBNZ) monetary policy statement.
"We think that the RBNZ is very likely to raise the official cash rate to 2.75% at next week's review," Deutsche Bank said. The market is pricing in an 80% chance of a 25 basis point rate hike.
The NZ dollar was US68.46c at 5pm from US67.42c at 5pm yesterday. It eased against a resurgent Australian dollar to A80.82c from A81.24c.
The NZ dollar rose to a two-week high against the yen after yesterday's resignation of Japanese Prime Minister Yukio Hatoyama raised concerns about the outlook for that currency, given that his likely successor has said in the past he wanted a weaker yen.
By 5pm the NZ dollar was at 63.15 yen from 62.83 yen at 8am and 61.55 yen at 5pm yesterday. It rose to 0.5569 euro from 0.5521 euro yesterday.
BNZ strategist Mike Jones expected the NZ dollar to remain well supported in coming months, with one of the reasons being "lofty" commodity prices as indicated by yesterday's ANZ index which showed commodity export prices up a further 2.5% in May.
Overall, world prices for New Zealand export commodities are 54.5% above year-ago levels and, even with a stronger kiwi currency, NZ dollar prices are up 30% over the same period.
Along with the impetus from rising commodity prices, a cautious improvement in rise appetite supported the NZ dollar after the US equity market was buoyant on Wednesday night.
The trade weighted index rose to 66.51 at 5pm from 65.83 at 5pm yesterday.
