The New Zealand dollar rose to its highest level in two months on a trade-weighted basis on speculation next week's expected official cash rate cut by the Reserve Bank will be the last in its easing cycle.

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The trade-weighted index climbed to 78.57 as at 8am in Wellington, from 78.29 late yesterday. The kiwi dollar rose to 73.27 US cents from 73.08 cents.

The Chicago Board Options Exchange (CBOE) Volatility Index, or VIX, known as Wall Street's fear gauge, has risen to a five-month high as financial markets have become unnerved by the close-run campaigns for the White House between Donald Trump and Hillary Clinton, while the Standard & Poor's 500 Index has fallen to its lowest level since early July.

Yet the kiwi dollar has advanced amid signs of strength in the local economy, including a pickup in the jobs market and a jump in dairy prices this week. While the RBNZ may be close to the end of its easing cycle, the Federal Reserve isn't expected to hike interest rates until next month.


"After next week's widely anticipated 25 basis point cut to the OCR the 1.75 percent level is seen to be the low, with next to zero chance of a further cut priced in," said Jason Wong, currency strategist at Bank of New Zealand. "Equities continue their weak run ahead of the US Presidential election."

Traders are awaiting US non-farm payrolls tonight for confirmation of the timing of the next Fed rate hike. The US economy probably added 175,000 jobs in October, up from 156,000 in the previous month.

The kiwi was little changed at 95.35 Australian cents from 95.32 cents yesterday as the market awaits the full monetary policy statement from the Reserve Bank of Australia today.

It fell to 58.74 British pence from 59.23 pence from 58.97 pence after stronger UK economic data and a court ruling that may make a Brexit more difficult. It rose to 65.92 euro cents from 65.70 cents, rose to 4.9519 yuan from 4.9381 yuan and rose to 75.35 yen from 74.99 yen.