The New Zealand dollar was higher against the US dollar as investors expect the US Federal Reserve to lower the number of rate hikes it is expecting to carry out next year.

The kiwi was at 68.64 US cents at 5pm in Wellington versus 68.48 US cents at 8am and late yesterday in Wellington. The trade-weighted index was at 74.92 from 74.86.

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The US Federal Reserve is widely expected to lift the federal funds rate tomorrow but there is a growing expectation it will pare back its track for rate hikes next year.

According to its latest projections in September, the median view among policymakers was for three rate hikes in 2019. Recent commentary from Fed officials, including Chair Jerome Powell, has pointed to a softer stance. In late November Powell said interest rates were "just below" what the Fed considered neutral.

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"The market is expecting a downward revision into the Fed's dot plots and that is being baked into the US dollar, which is boosting the other currencies," said Imre Speizer, Westpac Banking Corp's head of NZ strategy. The dot plot basically charts where Fed members see interest rates going during the next few months.

"That is the risk we have, that the dot plots do indeed move down," said Speizer.

He said the Fed announcement will be followed by New Zealand's third-quarter gross domestic product data. Economists are expecting the GDP to expand at 0.6 per cent on the quarter, which is softer than the 1.0 per cent the economy grew in the June quarter.

The kiwi traded at 4.7297 Chinese yuan from 4.7191 yuan yesterday. It was at 95.41 Australian cents from 95.24 cents yesterday and traded at 77.10 yen from 77.06 yen. It was at 54.17 British pence from 54.22 pence yesterday and little changed at 60.30 euro cents from 60.31 cents.

New Zealand's two-year swap rate was unchanged at 2.04 per cent; the 10-year swaps were down 1 basis point at 2.73 per cent.