The New Zealand dollar fell against a resurgent greenback after Federal Reserve chair Janet Yellen said the case has grown for a hike in US interest rates.

The local currency fell to 70.24 US cents as at 8am in Wellington, having earlier dipped as low as 70.09 cents, from 70.98 cents late yesterday. The trade-weighted index fell to 77.14 from 77.62.

In prepared remarks for Congress's Joint Economic Committee, Yellen said that at the Fed's policy meeting this month it "judged that the case for an increase in the target range had continued to strengthen" and such a move could be appropriate "relatively soon" dependent on incoming data. The kiwi rose from its overnight lows after Fonterra Cooperative Group announced an increase in its farmgate milk payout after recent gains in dairy prices.

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"Fed Chair Yellen helped cement market expectations for a December rate hike," said Imre Speizer, senior market strategist at Westpac Banking Corp. "That caused the AUD and NZD to fall, despite risk sentiment remaining healthy."

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Speizer said Fed funds futures now implying almost a 100 per cent chance of a rate hike in December and "are also pricing one rate hike during each of the next three years."

Meanwhile, Fonterra raised its forecast milk payout to $6.00 per kilogram of milk solids while keeping the earnings component at 50-60 cents per share. It said ingredient sales were strong despite an unprecedented decrease in milk collection and it was also enjoying a "strong performance and continued volume growth in consumer and foodservice."

The US dollar index rose to its highest level since 2003 and equity markets gained in Europe and the US after Yellen's testimony while US Treasuries fell, pushing yields on the 10-year note five basis points higher to 2.27 per cent. New Zealand's two-year swaps were unchanged at 2.17 per cent this morning while 10-year swaps held at 3.12 per cent.

The kiwi traded at 77.22 yen down from 77.33 yen yesterday. It fell to 4.8345 yuan from 4.8764 yuan, declined to 56.58 British pence from 57.09 pence and fell to 66.13 euro cents from 66.35 cents. The kiwi traded at 94.85 Australian cents from 94.92 cents yesterday.