New Zealand's benchmark S&P/NZX 50 stock index has gained about 1 per cent since May 1.
"It's month end and you would expect to see a bit of buying at month end, given that equities have had a good month," said Tim Kelleher, head of foreign exchange sales at Commonwealth Bank of Australia.
However, US equities tumbled into their Thursday close and other markets have fallen ahead of Trump's announcement. Generally, the kiwi tends to mirror movements in equities markets because its strength is associated with a keener appetite for risk.
"If you took month's end out, the kiwi would probably be a bit lower," because of concerns about what Trump may announce, Kelleher said.
The US has accused China of deliberately spreading the coronavirus so that it reached pandemic proportions and has also reacted negatively to China's plans for a crack-down on dissent in Hong Kong.
"We'll be announcing tomorrow what we're doing with respect to China," Trump told reporters at an Oval Office meeting on Thursday. "We're not happy with China," he said, without giving specific details about his plans.
Late last year, China and Trump reached a preliminary trade deal following an 18-month trade war involving tit-for-tat tariffs that Trump started, accusing China of gaming international trade rules to get an advantage over the US.
Kelleher said the market is speculating that the US may expel about 5,000 of the thousands of Chinese students currently studying in the US. "It's not a huge number, but it's quite symbolic."
According to Reuters, there are about 360,000 Chinese nationals enrolled at US schools, which brings in about US$14 billion ($22.5b) a year.
Kelleher said the other thing the market is watching is the growing heat in Australia's relations with China, initially sparked by Australia's support for an independent inquiry into the origins of Covid-19.
Insults hurled at Australia by various Chinese officials include calling it a trouble-maker, like "chewing gum stuck on the sole of China's shoe," and America's "kangaroo dog." China has also slapped tariffs on Australian barley and banned imports from major Australian meat works.
The New Zealand dollar was trading at 93.34 Australian cents from 93.57 cents yesterday. It was at 50.28 British pence from 50.46 pence, at 55.90 euro cents from 56.16 cents, at 66.49 yen from 66.68 yen, and at 4.4380 Chinese yuan from 4.4318 yuan.
The bid price on the two-year swap rate was 0.2125 per cent from 0.1625 per cent, while 10-year swaps were at 0.7175 per cent from 0.6500 per cent.
