By Tina Morrison
The New Zealand dollar gained in volatile trading over the weekend as investors weighed the likelihood of an interest rate hike in the US next month following labour market data on Friday.
The kiwi rose as high as 66.36 US cents, and was trading at 66.03 cents at 8am in Wellington from 66.16 cents at the New York close and 65.54 cents on Friday. The trade-weighted index jumped to 70.41 from 69.99 on Friday.
The US dollar index declined after touching its highest level in almost four months as investors considered whether the US Federal Reserve will raise interest rates next month following solid jobs data that just undershot expectations.
The labour report, released Friday in the US, showed the world's largest economy added 215,000 jobs in July, just missing expectations for a 225,000 gain.
"It was a highly volatile night for most currencies in the wake of the US payrolls report," said BNZ's Kymberly Martin.
"Overall the report was solid, whilst providing sufficient ambiguity to leave the September Fed rate hike debate alive and well. The initial response from the US dollar was to spike higher. However the move did not last. Within a couple of hours the US dollar was back down. The violent moves tossed the US dollar's peers around."
New Zealand dollar strength was underpinned by Fonterra's announcement on Friday that the dairy exporter would soften the blow of a lower milk payout for farmers this season through an interest-free loan to farmers, she said.
The New Zealand dollar advanced to 89.09 Australian cents from 89.01 cents on Friday, rose to 42.61 British pence from 42.24 pence, increased to 60.18 euro cents from 60.01 pence and gained to 81.98 yen from 81.79 yen.