The New Zealand dollar is heading for a 0.4 per cent weekly decline having lurched more than 1 US cent during the week in response to the US announcement that it plans to impose tariffs on a further US$200 billion ($295.4b) of Chinese imports.

The kiwi traded at 67.75 US cents as at 5pm in Wellington from 67.60 cents late yesterday and down from 68 cents a week ago. The trade-weighted index edged up to 72.56 from 72.45 yesterday, still down from 72.76 this time last week.

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The US pronouncements saw a sell-off in commodities and commodity-linked currencies as traders fretted about the impact of an escalating trade war.

But the CRB commodity index - a measure of 19 commonly traded commodities - gained 0.6 per cent after China's Ministry of Commerce said it was trying to avoid escalating the trade dispute.

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Meanwhile, US Treasury Secretary Steven Mnuchin said Washington was open to negotiations if China adopted structural change and the slow process of enacting new tariffs means there is no immediate impact from this week's announcements.

"The path that President Trump is on in terms of his trade manifesto is a prescribed and lengthy process," said Robert Rennie, chief currency strategist at Westpac Banking Corp.

"So we're probably entering into a period you would describe as a lull in the trade war. Maybe we won't really focus on it again until September" although there was always a risk that Donald Trump could reignite the issue via Twitter.

Any response from China was likely to include non-trade measures including investment flows but China "was unlikely to reach for the nuclear button" with its vast holding of US Treasuries, he said

The greenback fell overnight following weaker-than-expected US inflation of just 0.1 per cent in June for an annual rate of 2.9 per cent, the highest year-on-year rate since early 2012. New Zealand is set to release second-quarter inflation figures, with a quarterly rate of 0.5 per cent forecast by ASB Bank for an annual rate of 1.6 per cent.

The kiwi didn't move much after the Business NZ-BNZ performance of manufacturing index dropped 1.6 points to 52.8, seasonally adjusted in June.

The kiwi dollar gained to 76.31 yen from 75.78 yen yesterday and fell to 91.31 Australian cents from 91.53 cents. It increased to 51.40 British pence from 51.14 pence and gained to 58.09 euro cents from 57.82 cents. The local currency was little changed at 4.5180 yuan.

New Zealand's two-year swap rate fell 2 basis points to 2.14 per cent and 10-year swaps were unchanged at 3.02 per cent.