Kiwi rallies against greenback

The New Zealand dollar was around its highest level against the greenback in six weeks as the holiday break ended today.

After slipping below US72c in mid-afternoon yesterday, the kiwi raced up through the night to be buying US73.45c at 8am today.

The US currency fell as investors locked in recent gains ahead of a key US non-farm payrolls report later this week which could firmly dictate the currency's direction in the coming months.

Optimism about the prospects for a US recovery supported the greenback recently but analysts said more evidence of a strengthening economy was needed to justify further gains.

The US dollar had moved mostly higher since figures early last month showed the US economy shed a far fewer-than-expected 11,000 jobs in November.

The November jobs report, along with other above-forecast US data releases, prompted some economists to conclude employment growth may have commenced in December, but that is still a minority view.

Any sign of jobs growth raises expectations the US Federal Reserve will hike interest rates sooner rather than later _ a move that would boost US dollar-based assets.

Elsewhere in markets, commodity currencies rose on higher oil and gold prices.

The NZ dollar also rose to its highest level against the euro in 20 months, reaching 0.5096 euro at the local open, having dropped to around 0.5035 euro yesterday afternoon.

The kiwi reached a two-month high against the Japanese currency and was at 68.03 yen at 8am, while against the Australian dollar the kiwi was at A80.49c at the local open. The trade weighted index was 66.79 at 8am.

- NZPA