The New Zealand dollar was little changed, having fallen to a new three-week low overnight, only to bounce back when minutes of the last Federal Reserve policy meeting showed the bank wants to reduce its balance sheet, which may ease pressure to hike interest rates.

The kiwi traded at 69.73 US cents as at 8am in Wellington, having fallen as low as 69.36 cents after a stronger than expected US jobs survey, from 69.72 cents late yesterday. The trade-weighted index was at 75.85 from 75.86 yesterday.

The New Zealand dollar broadly mirrored the greenback as it see-sawed overnight. The ADP survey of US private employment showed an increase of 263,000 jobs in March, the highest since December 2014 and ahead of estimates of 187,000.

The data stoked speculation the Fed will hike rates two more times this year as it has flagged but doubts returned to the market after the FOMC minutes showed most policymakers believe the Fed should start reducing its US$4.5 trillion balance sheet this year, a move that would amount to tightening monetary policy.


"Raising the fed funds rate a quarter of a point every now and then is tinkering at the edges compared to the elephant in the room that is the balance sheet," said ANZ Bank New Zealand senior economist Sharon Zollner, in a note.

"The NZD was under pressure again overnight but in the absence of a turn in risk sentiment, it's difficult to see the NZD moving down too far given still-strong domestic data and improving export prices."

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The ADP survey suggests the official non-farm payrolls data due on Friday may also print more strongly than expected. Economists had been expecting Friday's figures to show the US economy added 174,000 jobs last month, down from 235,000 in February.

Adding to the mixed signals from the US overnight, the non-manufacturing ISM index for March came in at 55.2 against expectations of 57.

With little in the way of domestic economic releases scheduled, the kiwi dollar is likely to continue to be driven by offshore events.

US president Donald Trump and Chinese president Xi Jinping are scheduled to hold a summit meeting at Trump's Mar-a-Lago estate in Florida on Thursday, while Trump separately dumped Steve Bannon from the National Security Council and criticised the Syrian regime over a gas attack on rebels.

The local currency traded at 92.03 Australian cents from 92.07 cents late yesterday.

It traded at 77.09 yen from 77.10 yen and rose to 4.8023 yuan from 4.7971 yuan. It was little changed at 65.26 euro cents from 65.27 cents and slipped to 55.76 British pence from 55.98 pence.