The New Zealand dollar rose after Hong Kong's government formally killed the extradition bill that sparked massive protests since June. It received a further fillip when the US and China agreed to resume high-level trade talks.

The kiwi was trading at 63.71 US cents at 5pm in Wellington from 63.59 at 8am. The trade-weighted index was at 70.96 points from 70.92.

See live rates for the NZ-US $ below. Click for more information:NzForex Foreign Exchange Transfers

Hong Kong leader Carrie Lam has withdrawn the bill that would have allowed the transfer of fugitives to mainland China.

"Initially, we had a nice up-tick, risk on, when it was confirmed," says Michael Johnston, a dealer at XE. "And then we had some news on the US-China trade talks."

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The White House and China held their first top-level phone call since mid-August and agreed that deputy-level officials will meet in mid-September to "lay the groundwork for meaningful progress. Senior negotiators will then meet in Washington DC in early October, according to US officials. This was confirmed by the Chinese Ministry of Commerce.

"Both sides agreed they should work together and take practical actions to create favourable conditions for the negotiations," the ministry said in a statement.

Both the US and China imposed further tariffs on each other's exports from the beginning of September.

XE's Johnston says the two nations are "stepping back from the precipice of trade wars. Obviously, it's far from a done deal but it's a step in the right direction and added to the favourable risk-on environment."

The Australian dollar continued to out-perform the kiwi as it has done since Aug. 9 when New Zealand's Reserve Bank surprised the market by cutting its official cash rate 50 basis points to 1 per cent.

Normally, RBNZ only makes cuts of that magnitude in times of crisis, such as the Christchurch earthquakes or the GFC.

The Reserve Bank of Australia made two 25 basis point cuts to its cash rate in June and July but left rates unchanged at its latest meeting earlier this week.

"The data out of Australia has been not bad – the GDP was not bad and the RBA said the housing market in Australia is looking a bit better so they didn't need to cut rates," Johnston says.

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"It doesn't sound like their finger's on the trigger."

Nevertheless, Johnston says he expects trading will remain volatile.

"We're not out of the woods yet." However, technically and sentiment-wise, we may have seen the lows for now, he says.

The New Zealand dollar was trading at 93.48 Australian cents from 93.54, at 52.05 British pence from 52.03, at 57.77 euro cents from 57.64, at 67.88 yen from 67.63 and at 4.5449 Chinese yuan from 4.5417.

The two-year swap rate edged up to a bid price of 0.9092 per cent from 0.8917 yesterday and 10-year swaps climbed to 1.1900 per cent from 1.1500.