The New Zealand dollar climbed above US84c for the first time in more than a week, as the greenback fell broadly in response to an eagerly awaited speech by Federal Reserve chairman Ben Bernanke.
In the speech at a central banking conference in Jackson Hole, Wyoming, Mr Bernanke said the Fed had marked down its outlook for US economic growth and made clear the policy focus was still on spurring a stronger recovery, but he did not provide any fresh details on steps the Fed could take.
The speech appeared to disappoint some market participants who had hoped the Fed chairman would make a clear case for a further easing of monetary policy. Mr Bernanke also said the onus for boosting long term growth prospects lay at the feet of the White House and the US Congress.
The NZ dollar rose from US83.03c at 5pm on Friday to peak around US84.15c, then eased to be at US83.78c at 8am. It had another run higher during the day and was at US84.52c at 5pm.
Dealers said firm equity markets and generally improved sentiment helped both the Australian and New Zealand dollars.
The NZ dollar rose to be A79.51c at 5pm from A79.29c at the same time on Friday.
"Fear is finally beginning to subside. But is that because markets are sick of jumping at shadows or because they are finally thinking that recent moves have actually been a tad overdone," Rankin Treasury said.
The NZ dollar rose to be 0.5834 euro at 5pm from 0.5780 euro at 8am and 0.5766 at 5pm on Friday. It was at 64.81 yen from 64.34 yen at 8am and 64.20 yen at 5pm on Friday.
The trade weighted index rose to 71.22 from 71.39 on Friday.
ANZ said Mr Bernanke's speech had been a "fizzer". US dollar weakness resulted and helped lift the NZ dollar close to resistance levels.
Markets were disappointed with the speech, as it failed to indicate any more unconventional policy stimulus, but initial risk-off moves were trimmed.
The market either partly bought Mr Bernanke's story that things were not so bad, or concluded a third round of quantitative easing remained on the table, ANZ said.
"Ultimately, expect higher levels for the NZD as it remains the currency of calm amongst a market of mayhem."
