The New Zealand dollar extended gains against its trans-Tasman counterpart on concerns that a trade war between the world's two biggest economies would weigh more heavily on the Australian economy, potentially keeping interest rates lower for longer.

The kiwi rose to 93.73 Australian cents as at 5pm in Wellington from 93.18 cents yesterday. It traded at 69.35 US cents from 69.38 cents.

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The Aussie fell a quarter of a cent to 73.93 US cents, near a 12-month low, after US President Donald Trump today tasked the US Trade Representative to find US$200 billion ($288.5b) of Chinese goods to slap tariffs on and threatened to double it if China retaliated again.

The Asian nation this week responded in kind to US$50b of earlier US tariffs, actions which have heightened fears among investors the two nations will continue to outdo the other's trade restrictions.

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That's been felt more keenly in Australia, with the 'lucky country' more heavily exposed to China through its exports of iron ore, and encouraging investors to use Australian assets as a proxy for investing in China.

The Australian dollar "is suffering from the hands of fear around the ramifications for Australia if there's a trade war," said Alex Hill, head of dealing Australasia at HiFX in Auckland. "For the kiwi/Aussie, how high does that go now? There's a school of thought that it could trade up to 95 (Australian cents) and test that again."

Hill said the hope that the cross-rate would drop back to the mid-80s level as things returned to normal was "a way off, at least until this geopolitical situation settles down".

Domestically, the Global Dairy Trade auction overnight will be watched to see whether the increased milk production will lead to the expected flat-to-slightly weaker prices, ahead of first-quarter balance of payments tomorrow and gross domestic product on Thursday.

New Zealand's two-year swap rate slipped 1 basis point to 2.22 per cent, and 10-year swaps fell 3 basis points to 3.09 per cent.

The kiwi rose to 4.4706 Chinese yuan from 4.4647 yuan yesterday and fell to 76.05 yen from 76.59 yen. It slipped to 59.60 euro cents from 59.83 cents yesterday and traded at 52.28 British pence from 52.26 pence. The trade-weighted index was at 73.49 from 73.47.