The New Zealand dollar is nearly two US cents higher than this time yesterday after trading a range of more than 2.5 cents in the last 24 hours.
The managing director of Rankin Treasury Advisory, Derek Rankin, said the rollercoaster ride began with yesterday's shock cut in interest rates by the Reserve Bank of Australia.
"Overnight we had the Fonterra milk option which was really a very strong number and that sent the New Zealand dollar up but at the same time we had some poor data in the United States and that sent the US dollar down. So the upshot was that both the New Zealand dollar and the Australian dollar lifted strongly overnight from the cross rates and against the US dollar," he said.
"And then we had the Reserve Bank Governor's speech today which was broadly in line with what he was saying last week and more explained that navigating through all the risks he was probably more likely to leave New Zealand interest rates unchanged unless there was another major shock or the drought gets a lot worse."
Whole milk powder prices, the key price for Fonterra, jumped 19 percent in the latest auction.
A short time ago, the kiwi was trading at 74.05 US cents, up from 72.2 cents yesterday, 94.81 Australian cents, 48.85 British pence, point-6458 euro, 87.3 yen, nearly 3 yen higher than yesterday, and 4.63 renminbi.
