The New Zealand dollar fell, dragged lower by the weakening Chinese yuan which is widely viewed as China's retaliation to US tariffs.

The kiwi was trading at 63.70 US cents at 5:05pm in Wellington from 64.01 at 7:50am. The trade-weighted index was at 71.00 points from 71.24.

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"The yuan's being followed at the moment because if they depreciate their currency, then it's expected other countries will follow suit and a currency war will ensue," says Imre Speizer, currency strategist at Westpac.

"It's seen as a response to the trade wars," Speizer says.

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While the Australian dollar fell against the greenback too, the New Zealand dollar fell more and was trading at 94.25 Australian cents from 94.38 and at 4.5064 Chinese yuan from 4.5206.

"Normally, it's the Aussie dollar that bears the brunt of these things but lately it's been the kiwi's turn," Speizer says.

China is both countries' largest trading partner and Australia is New Zealand's second-largest trading partner.

With New Zealand's Reserve Bank having cut its official cash rate 50 basis points earlier this month, a size of rate cut normally reserved for times of crisis, and Australia's Reserve Bank declining to cut its cash rate at its last meeting, "the focus now is more on the dovish RBNZ rather than the RBA," he says.

"Australia has had enough news lately to warrant caution – the jobs numbers were decent and trade data has been really strong. The news has been more mixed rather than just gloomy as it has been in New Zealand."

As in currency markets around the world, traders are also awaiting whatever comes out of the annual central bankers' gathering at Jackson Hole in Wyoming this weekend.

The market is particularly awaiting a speech from Federal Reserve chair Jerome Powell who is scheduled to speak overnight Friday, New Zealand time.

The minutes of the Fed's last meeting were released this week but didn't endorse market expectations of steeper rate cuts than the Fed has so far signalled.

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The New Zealand dollar was trading at 52.55 British pence from 52.77, at 57.48 euro cents from 57.72 and at 67.80 yen from 68.23.

The New Zealand two-year swap rate edged up to a bid price of 0.9285 per cent from yesterday's close at 0.9273. The 10-year swap rate rose to 1.2300 per cent from 1.2275.