The New Zealand dollar rose, pushing the trade-weighted index to a 16-month high, as the market reassessed Friday's non-farm payrolls data out of the US on concern jobs growth is being driven by lower-paying positions and the case for a rate hike isn't conclusive.
The kiwi finished the day at 73.35 US cents from 72.88 cents in late New York trading on Friday. It spiked as high as 73.57 cents after the payrolls data.
The trade-weighted index rose as high as 78 from 77.63 on Friday, having climbed as high as 78.10 after the US data.
The TWI is once again well above the levels the Reserve Bank is projecting, with an average 76 forecast for the third quarter, suggesting the threat of further interest rate cuts isn't enough to offset the increasingly long horizon seen for any Fed rate hikes.
"We've seen some repricing of the initial reaction to the jobs numbers. There was a big increase in government employment and there's a question about the quality of the employment being created," said Sheldon Slabbert, a sales trader at CMC Markets NZ.
There had been a question mark over jobs growth because it had proved to be "fairly resilient" even as measures of US gross domestic product have been revised down, he said.
Expectations for Fed rate hikes had grown in the wake of "more hawkish" comments from Fed chair Janet Yellen at Jackson Hole.
Meanwhile, no change is expected when the Reserve Bank of Australia reviews interest rates on Tuesday and this week's GlobalDairyTrade auction may show further increases in milk powder prices, a plus for the New Zealand economy and the kiwi, he said.
The New Zealand dollar rose to 96.47 Australian cents from 96.26 cents in New York on Friday. It increased to 75.792 yen from 75.54 yen and gained to 4.8959 yuan from 4.8683 yuan. It rose to 65.63 euro cents from 65.33 cents and gained to 55.05 British pence from 54.84 pence.
New Zealand's two-year swap rate rose 1 basis point to 2 percent and 10-year swaps rose 3 basis point to 2.43 percent.