The New Zealand dollar rose to its highest in almost two weeks as investors unwound bets the greenback would advance amid uncertainty about when the Federal Reserve will begin tapering monetary stimulus.
The kiwi jumped to 80.17 US cents at 8am in Wellington, after earlier touching 80.46 cents, from 79.60 cents on Thursday. The trade-weighted index increased to 75.27 from 74.90.
The US dollar index, which measures the greenback against a basket of currencies, fell to its lowest in almost two months amid uncertainty about when the Fed will start to pull back its $US85 billion ($NZ107 billion) a month bond buying programme, which has debased the US dollar.
Investors received little guidance in last month's statement from the Fed and are awaiting the next Federal Reserve Open Market Committee decision to follow a two day meeting in September.
"The Fed has given very little guidance on if they are going to taper or not taper and there is a big time window before the next FOMC," said Martin Rudings, senior advisor at OM Financial.
A report from the US overnight that initial jobless claims fell over the past month to the lowest in five years supported sentiment for tapering to start in September, Mr Rudings said.
The New Zealand dollar edged up to 87.97 Australian cents at 8am in Wellington, from 87.68 cents ahead of Australia's release of its Statement of Monetary Policy.
Traders will be eyeing the central bank's economic forecasts for signs of whether it is likely to cut the benchmark rate further following a quarter point reduction to 2.5 per cent on Tuesday.
"You have got to suspect that will be dovish," said Mr Rudings.
In New Zealand retail card spending figures for July are released.
The local currency advanced to 77.53 yen from 76.92 yen, gained to 59.89 euro cents from 59.66 cents and it rose to 51.58 British pence from 51.36 pence.