The New Zealand dollar is headed for a 1.7 per cent weekly gain as markets are positioned for good news on the US-China trade front.

The kiwi was trading at 66.98 US cents at 5pm versus 67.00 cents at 8am in Wellington. It was at 65.87 cents late last Friday in New York. The trade-weighted index was at 73.04 from 73.08 this morning.

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US President Donald Trump and Chinese President Xi Jinping are due to sit down during the G20 summit in Osaka, Japan and there is growing optimism that the talks could ease trade tensions between the two nations.

OFX noted, however, "the path to a truce seems opaque at best," and conflicting media reports are adding to the uncertainty.

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According to Reuters, White House economic adviser Larry Kudlow dismissed a Wall Street Journal report that China was insisting on lifting sanctions on Chinese telecom equipment giant Huawei Technologies Co Ltd as part of a trade deal and that the Trump administration had tentatively agreed to delay new tariffs on Chinese goods.

OMF private client manager Mark Johnson said that while risk sentiment is positive there are "low expectations for a deal" between the two nations.

"If the US manages to reopen trade talks, it may be seen as a positive and risk may rally next week."

He said the kiwi dollar could push to 68.80 US cents but "that looks very unlikely given the RBNZ easing bias, weak business confidence and subdued domestic growth as identified by the RBNZ recently."

This week the central bank held rates at a record-low 1.5 per cent but said that more monetary policy easing was likely to be necessary.

In the event there is no deal or progress toward one, Johnson said he would expect to see the kiwi open lower on Monday.

The kiwi was trading at 95.52 Australian cents from 95.59. It was at 52.86 British pence from 52.87, at 58.93 euro cents from 58.91, at 72.07 yen from 72.19, and at 4.6032 Chinese yuan from 4.6071.

The New Zealand two-year swap rate was at 1.3407 per cent from 1.3383 late yesterday, while the 10-year swap rate was at 1.7750 per cent from 1.7975 per cent.

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