The New Zealand dollar extended its gains amid concern financial markets have been building too much optimism about US President Donald Trump's ability to deliver tax cuts and US economic growth.

The kiwi rose to 72.25 US cents as at 5pm in Wellington, and earlier touched a week-high of 72.40 cents from 71.73 cents late yesterday. The trade-weighted index rose to 78.55 from 78.11.

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The US dollar initially gained overnight after figures showed the US consumers price index rose 2.5 per cent in the 12 months through January, the biggest year-on-year gain since March 2012, and faster than economists were expecting. But the greenback subsequently gave up its gains amid concern too much weight has been given to possible Trump policies such as the tax cuts that he has hinted at, given the White House has to win over the Congress and Senate for major policy changes.

"The market's having second thoughts on being long the US dollar," said Martin Rudings, senior dealer at OMF. "The likelihood of him disappointing the market is quite high. It's a crossroads."

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The kiwi dollar didn't move much after the release of the ANZ-Roy Morgan consumer confidence index, which showed confidence slipped to 127.4 this month from 128.7 in January, still above its long-term average. It also didn't move much after Finance Minister Steven Joyce said tax cuts were one of the four key things he was considering for the 2017 budget, along with reducing debt and infrastructure spending.

Rudings said the market "has been sitting pretty short kiwi dollars since the MPS", meaning traders are more inclined to believe the kiwi will fall since the Reserve Bank indicated there wasn't much prospect of a rate hike as soon as this year. Still, if the US dollar weakens further, the kiwi "could head towards 72.80 US cents," he said.

The kiwi rose to 57.96 British pence from 57.52 pence and gained to 68.08 euro cents from 67.74 cents. It rose to 93.66 Australian cents from 93.42 cents and gained to 82.22 yen from 81.96 yen. The kiwi rose to 4.9543 yuan from 4.9233 yuan.

New Zealand's two-year swap rose 5 basis points to 2.37 per cent while 10-year swaps rose 4 basis point to 3.53 percent.