The New Zealand dollar fell against the greenback after Canada's arrest of Huawei's chief financial officer stoked concerns that tensions between the US and China may flare up again.

The kiwi traded at 68.62 US cents at 5pm in Wellington, from 68.93 cents at 8am in Wellington and 69.13 cents yesterday. The trade-weighted index was at 74.87 down from 75.19 yesterday.

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Wanzhou Meng, also deputy chair of the Chinese telecommunications giant, was arrested in Vancouver on December1, a spokesman for Canada's Department of Justice said, according to Radio New Zealand. She was being sought for extradition by the United States, he said.

The news added to growing concerns that the US and China may not be able to resolve their trade dispute as the two nations kick off 90 days of talks.

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"The markets sold off quite aggressively," said Mark Johnson, a private client manager at OMF. He said the kiwi may slide further.

"If we see further risk off, that's got to be positive for the US dollar."

Johnson said the kiwi may also have been weighed slightly by the news that Fonterra lowered its forecast payout to its farmer-shareholders. It now expects to pay farmers $6.00-$6.30 per kilogram of milk solids, down from the prior range of $6.25-$6.50/kgMS.

The payout will now be between $9 billion and $9.8b versus $9.69b and $10.08b if the old forecast had held.

The kiwi did. however, gain against the Aussie, trading at 95.04 Australian cents from 94.73 cents yesterday. The New Zealand dollar has been benefiting from weaker data across the Tasman and today was no exception. The October trade balance was below expectations. While retail sales rose in line with expectations, they only lifted 0.3 per cent.

Looking ahead, Johnson said markets will be watching for the US jobs data overnight Friday for any clues about the US Federal Reserve's plans for interest rates.

The kiwi traded at 77.35 yen from 78.08 yen yesterday and fell to 4.7215 Chinese yuan from 4.7458 yuan. It declined to 60.51 euro cents from 61.02 cents yesterday and fell to 53.93 Britsh pence from 54.43 pence.

New Zealand's two-year swap rate decreased 1 basis point to 2.05 per cent; the 10-year swaps dropped 3 basis points to 2.79 per cent.