The New Zealand dollar gained along with other commodity-linked currencies as prices of raw materials including crude oil rose overnight and the greenback declined.

The kiwi dollar advanced to 71.88 US cents as at 8am in Wellington, from 71.44 cents late yesterday. The trade-weighted index gained to 78.88 from 78.66.

Crude oil rose about 2.5 percent overnight to reach a 17-month high after OPEC and some non-OPEC producers agreed to cut output next year, while the CRB Index of 19 commonly traded commodities climbed 0.9 percent to a five-month high.

The US dollar index, which had climbed to 16-year highs in the wake of Donald Trump's US election win, fell about 0.7 percent overnight ahead of the Federal Open Market Committee's two-day policy meeting, which is widely expected to result in a rate hike.


"The NZD along with other commodity-linked currencies has pushed higher overnight on the back of soaring oil prices and concerns that the Federal Reserve could express concerns over the US dollar Index's recent gains," traders at HiFX said in a report.

Financial markets are certain the Fed will hike this week and signal further increases next year. What's less certain is the degree to which the Fed will take into account US president-elect Donald Trump's pledges to cut taxes while ramping up spending on infrastructure, fuelling economic growth and inflation.

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The US dollar index reached a 16-year high of 102.05 last month, before retreating, but has since strengthened again since the European Central Bank extended its bond-buying programme last week.

The kiwi dollar traded at 67.51 euro cents from 67.63 cents late yesterday. It rose to 95.88 Australian cents from 95.58 cents, slipped to 56.67 British pence from 56.83 pence and rose to 4.9595 yuan from 4.9496 yuan. The kiwi gained to 82.71 yen from 82.40 yen.