The New Zealand dollar was little changed against the US dollar and reached its highest level this year against the yen ahead of the outcome of the Federal Open Market Committee's two-day meeting which will show how quickly the central bank intends raising interest rates.

The kiwi dollar traded at 71.98 US cents as at 8am in Wellington from 71.94 cents late yesterday. The trade-weighted index rose to 79.03 from 78.91.

The Fed is widely expected to announce a 25 basis point increase in the fed funds rate to a range of 0.5 per cent-to-0.75 per cent but will also indicate the track of US interest rates over coming years and may take into account both the surge in US bond yields since president-elect Donald Trump's victory and the prospects for fiscal stimulus coming from infrastructure spending and tax cuts.

"Tomorrow morning the US FOMC will meet and is set to deliver its second hike of this cycle," said Kymberly Martin, senior market strategist at Bank of New Zealand, in a note.


"The last was in December 2015. We and the market believe the Fed's 'gradual' tightening process may pick up marginally from this sloth-like pace next year. We anticipate two more hikes."

Helping the prospects for the kiwi and the Australian dollars overnight were figures showing Chinese industrial production grew a faster-than-expected 6.2 per cent in November while retail sales gained 10.8 per cent, also beating estimates.

The kiwi edged up to 4.9641 yuan from 4.9622 yuan.

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The kiwi dollar traded at 67.78 euro cents from 67.62 cents late yesterday. It rose to 96 Australian cents from 95.93 cents, traded at 56.82 British pence from 56.73 pence. The kiwi gained to 82.95 yen from 82.78 yen, having earlier touched 83.21 yen, the highest level this year.