The New Zealand dollar is headed for a 1 per cent slide against its US counterpart this week as investors see improving prospects there but potential headwinds here.

The kiwi was trading at 67.61 US cents at 5pm from 67.60 late yesterday and 68.31 in New York last week. The trade-weighted index was at 73.18 from 73.20 last night and 73.71 a week ago.

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The local dollar fell as low as 67.30 US cents overnight after a surprisingly strong manufacturing survey from the Philadelphia Federal Reserve lifted sentiment there and set up equity markets there for their fourth straight day of gains.

That was reversed early in the local trading session on reports that US Treasury Secretary Steven Mnuchin had advocated lifting tariffs on some Chinese goods to speed up the two nations' trade discussions. The kiwi rebounded to more than 67.80 US cents before quickly giving up much of the gain.

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Martin Rudings, private client manager at OMF, said views on the direction of the US economy remain mixed.

But he said recent weak data here, prospects for a flat December quarter CPI figure next week, and the risks that Reserve Bank changes to bank capital requirements may slow growth, are all weighing on the kiwi.

"I still see the kiwi coming off and that's just because of a stronger US dollar going forward," he said. "I still don't see a recession in the US."

A combination of major global events – like the Brexit vote in London Tuesday night – and thin summer holiday liquidity has compounded volatility this week.

Temporary relief for UK Prime Minister Theresa May saw the kiwi fall to a two-month low against the pound. But it is also near a six-week low against the Aussie dollar.

Rudings said the "flash crash" in world equity and currency markets earlier this month had "wiped out" a lot of short positions that had been supporting the kiwi-aussie cross.

"That was a big portion of our market's position that was taken out," he said.

With that gone, the kiwi has been free to come off amid mixed economic indicators.

The kiwi was at 52.12 British pence at 5 pm from 52.50 pence yesterday. It was at 94.01 Australian cents from 94.31 late yesterday. It fell to 73.19 Japanese yen, from 73.60, to 59.32 euro cents from 59.34, and was at 4.5820 Chinese yuan from 4.5729.

Rudings is not convinced the US will lift tariffs on China's good. But if it did that would be positive for both the kiwi and Aussie – probably more for the latter.

That officials are even considering it is potentially positive, he said, but also a signal that they feel the impasse is so great that the only way to make progress is to lift the tariffs.

"It does tell us that the impasse is quite large – it's a meaningful impasse."

While international events will set the kiwi's direction, Rudings said there appears to be a shift in thinking about growth and the prospects for interest rate cuts here this year.

That is reflected in recent bank bill pricing, he said. Last month ANZ surprised the market by picking three interest cuts, the first in November.

Data this week included a strong jump in dairy auction prices, but weaker-than-expected December credit card spending and the lowest December house sales in seven years.

Rudings said the Reserve Bank's plans to require lenders to increase their tier one capital holdings is also getting attention offshore. This week UBS said the new thresholds appeared "excessive" and warned they could increase home mortgage rates by 0.8 to 1.25 percentage points. Last month Fitch called them "radical" and highly conservative.

Rudings said that if the central bank proceeds as planned, that could slow growth in coming years.

"The offshore banks are looking at that as a real possibility and a real negative."

The New Zealand two-year swap rate rose 3 basis points to 1.89 per cent while the 10-year swap rate rose 4 basis points to from 2.595 per cent.