The New Zealand dollar was slightly stronger as markets await local March-quarter jobs numbers on Wednesday and the release of the Federal Reserve's latest views on monetary policy the next day.

The kiwi was trading at 66.79 US cents at 5pm in Wellington from 66.60 at 8am. The trade-weighted index rose to 72.82 points from 72.62.

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Peter Cavanaugh, the senior client advisor at Bancorp Treasury Services, says the local currency has performed well against the US dollar since GDP data was released there on Friday.

Although the US economy grew at an annualised 3.2 per cent pace in the March quarter, much stronger than expectations of 2.3 per cent growth, "the markets decided the detail of the GDP data wasn't great," Cavanaugh says.


The unexpected surge in GDP was due to a sharp drop in imports, a sharp increase in inventories and was offset by slower consumer spending and business investment.

Cavanaugh says the US market still has a full rate cut within the next 12 months priced in.

"The market had to justify its positioning for a Fed rate cut next year so it looked for all the negatives it could find."

The market is expecting New Zealand's unemployment rate for the March quarter will come in between 4.2-4.4 per cent and that private sector wage inflation – including overtime – will have risen 0.5 per cent during those three months.

The unemployment rate was 4.3 per cent at the end of last year, a level that the Reserve Bank has described as its more or less maximum sustainable level, although the official inflation rate in the year ended March was only 1.5 per cent, below the central bank's 2 per cent target.

"If the unemployment rate falls again, it's going to put Reserve Bank governor Adrian Orr in a real quandary, because he's winning on that half of the mandate and losing on the other half," Cavanaugh says.

The New Zealand dollar was trading at 94.85 Australian cents from 94.45, at 51.63 British pence from 51.48, at 59.85 euro cents from 59.63, at 74.53 Japanese yen from 74.21 and at 4.4938 Chinese yuan from 4.4749.

The New Zealand two-year swap rate rose to 1.6480 per cent from 1.6312 on Friday while the 10-year swap rate fell to 2.1930 per cent from 2.1950.