The New Zealand dollar climbed after dairy prices rose more than expected at the latest GlobalDairyTrade auction, clawing back losses after a Federal Reserve official raised the prospect of an early US rate hike.

The kiwi rose to 72.70 US cents at 8am from 72.26 cents yesterday. The trade-weighted index advanced to 76.72 from 76.07 yesterday.

The local currency dropped from as high as 73.04 US cents after New York Federal Reserve president William Dudley said the world's biggest central bank could raise the federal funds rate next month and that the market was complacent about the need to lift short-term rates, while noting that there might not be as many increases over the longer term.

A stronger-than-expected result at Fonterra Cooperative Group's GlobalDairyTrade auction helped the kiwi recover some of that decline with prices for whole milk powder jumping 19 per cent to US$2,695 a tonne, and a 13 per cent gain in the trade-weighted basket.

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"A bumper result was expected, but expectations were still exceeded," Bank of New Zealand currency strategist Jason Wong said in a note.

"The NZD now sits at 0.7280. Another unsuccessful attempt to push much beyond 0.73 will have got the attention of technical analysts and that level represents an area of strong resistance."

Local employment data is expected to show the unemployment rate fell to 5.3 per cent in the June quarter, with Statistics New Zealand delaying the release to ensure quality control as they use a new methodology, and BNZ's Wong said the data could shock the market if it delivers a surprise result. Producer inflation figures will also be watched.

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The local currency rose to 94.43 Australian cents from 94.05 cents yesterday and increased to 72.91 yen from 72.59 yen. It was little changed at 64.49 euro cents from 64.54 cents and slipped to 55.75 British pence from 56 pence. The kiwi rose to 4.8156 Chinese yuan from 4.6954 yuan yesterday.