The New Zealand dollar surged about 1 US cent after the US Federal Reserve raised interest rates as expected but kept its track for further hikes unchanged, reiterating that it sees "gradual increases".

The kiwi dollar rose to 70.24 US cents as at 8am in Wellington, and earlier reached 70.39 cents, from 69.31 cents late yesterday. The trade-weighed index rose to 76.48 from 75.97.

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The Fed raised the fed funds rate by a quarter point to a range of 0.75 per cent to 1 per cent as expected and kept to its projection for two more increases this year, saying "gradual adjustments" will allow economic activity to grow "at a moderate pace". The US dollar fell to its lowest level in more than three weeks. Locally, traders are awaiting fourth-quarter gross domestic product, with a 0.7 per cent rate forecast, a slowdown from the third quarter's 1.1 per cent expansion.

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"With the Fed statement and projections less hawkish than some feared, the USD major currency index fell after the announcement," said Jason Wong, currency strategist at Bank of New Zealand, in a note. "Today we think that the risks are weighted towards Q4 GDP coming in softer than market expectations. Any NZD dip on the result wouldn't be expected to be sustained, as the data are fairly dated and we still think that the NZ economy is in good shape."

The pace of potentially market-moving events picks up through the week, with Dutch elections underway, statements due from the Bank of Japan, Bank of England and Swiss National Bank, and Australian labour market data.

The kiwi dollar rose to 65.68 euro cents from 65.29 cents and gained to 57.19 British pence from 57.02 pence. It slipped to 91.33 Australian cents from 91.56 cents and rose to 4.8558 yuan from 4.7931 yuan. It traded at 79.72 yen from 79.60 yen yesterday.