The New Zealand dollar is heading for a 3.2 per cent weekly gain against the greenback after US Federal Reserve chair Janet Yellen's cautious outlook on the US economy saw investors dial back expectations for a rise in US interest rates and eroded demand for the world's reserve currency.

The kiwi rose to US68.96c at 5pm yesterday from US66.82c a week before in New York. It hit a nine-month high US69.66c during Northern Hemisphere trading overnight on Thursday. The trade-weighted index was little changed at 72.85 from 72.93 on Thursday and is heading for a 1.9 per cent weekly gain.

NZ dollar hits fresh nine-month high
Kiwi dollar dips as investors avoid risk

Yellen urged caution on future rate hikes. That pushed the greenback lower against most major currencies and investorswere awaiting US non-farm payrolls data overnight to see whether that caution is warranted.


A "bad number" would further weaken the US dollar, said Michael Johnston, a senior trader at HiFX in Auckland.

Johnston said the strength of the kiwi is undermining the Reserve Bank's bias towards lower interest rates by making imported products cheaper, lowering the rate of inflation, and heightens the chance of another rate cut at this month's meeting.

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The kiwi was almost unchanged at A90.15c and 77.52. The kiwi fell to 60.58c from 60.96c on Thursday and traded at 48.08 British pence from 48.11p.