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A strong rise in milk powder prices at Fonterra's monthly internet auction sent the New Zealand dollar surging up.
The Kiwi reached a 10-month high around 67.20 US cents a few minutes after the 8am local open on Wednesday, having been around 66.60 US cents less than an hour earlier.
Early Tuesday afternoon the Kiwi peaked above 67.10 US cents but quickly fell back below the US67-cent level, dropping to below 66.50 US cents briefly before the Fonterra auction result sent it scurrying higher.
BNZ Capital senior strategist Danica Hampton said whole milk prices rose an average 25.8% at the auction, helping the New Zealand dollar's climb on Wednesday morning.
Before that, the Kiwi had slipped as the US dollar firmed a little, she said.
"Modest losses across global equities and worries about intervention encouraged a bit of profit-taking on short USD positions."
Tuesday's ANZ commodity price data was relatively uninspiring.
While the global price of New Zealand's export bundle rose 1% in June, recent currency strength all but erased the gains and in New Zealand dollar terms the index rose just 0.1% for the month.
But Fonterra's overnight milk price auction was "much more encouraging", Hampton said.
The fundamental backdrop had become more currency supportive in the past few weeks.
At 8am on Wednesday the New Zealand dollar was a also a little stronger against other currencies, compared to its price at 5pm.
The Kiwi was buying 0.4657 euro from 0.4640, and 63.90 yen from
63.59, while against the Australian dollar it was up to AU79.42
cents from AU79.17 cents. The trade weighted index rose to 62.04 at
8am from 61.78 at 5pm.
