* Kiwi climbs roughly half a cent to a session high of $0.8209 after RBNZ Governor Graeme Wheeler says that while inflation had been low it was still likely to return to the middle of the bank's target range.
* The central bank held its official rate at a record low 2.5 percent, as widely expected.
* "Markets got a bit excited about a dovish central bank governor, and those hopes have been dashed," said Dominick Stephens, chief economist at Westpac. "The statement gave no credence to the idea of rate cuts in the near term."
* New Zealand short-term bills slip as investors start to price out the possibility of a rate cut. Government bond prices also fall at the short end, pushing yields up as much as 5 basis points.
* Australian dollar pushes up to $1.0368, extending a climb to around $1.0320 in the local session on Wednesday, when a sharp rise in domestic inflation prompted investors to pare expectations on the speed and scale of further rate cuts.
* Australian interbank futures factoring in a 50/50 chance of an 25 basis point easing to 3.0 percent in November. A move lower remains fully priced in by Christmas.
* Aussie, kiwi also bolstered after data showing a surge in new US home sales suggests an improving US economy. Data follows figures showing a pick-up in Chinese manufacturing, indicating the global economic recovery is gathering momentum.
* A brighter outlook for the global economy raises demand for growth-leveraged commodity currencies, which are particularly sensitive to news out of key export market China. But gains seen capped after weak German economic data suggests the euro zone is heading for a recession.
* Focus on whether Aussie can hold above $1.0344, its 200-day moving average, after it was unable to sustain a climb above the key technical level last week. A sustained break above would open the door to $1.0387, the 50 percent retracement of the Aussie's September-October slide.
* Kiwi broadly supported after strong demand at New Zealand's first issue of inflation-linked bonds in more than a decade on Wednesday helps the currency to recover losses.
* Technical support seen at $0.8134, its 55-day moving average, but gains may be capped as the currency has faced resistance in the mid $0.8200 region in past weeks.
* Australian government bonds slip, with the three-year contract indicated down 0.010 point at 97.420, while the 10-year contract slips 0.005 point to 96.875.