The New Zealand dollar jumped to a three-month high after US manufacturing data came in weaker than expected and equity markets fell on a surprise move by the US to reimpose tariffs on steel and aluminium imports from Brazil and Argentina.

The kiwi was trading at 65.02 US cents at 8am from 64.46 cents at 5pm. The trade-weighted index was at 71.97 from 71.48.

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Equity markets weakened overnight after data from the Institute for Supply Management suggested US factory activity contracted for a fourth month in November, at odds with recent signs of improvement in spending and sentiment.

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The institute's index fell to 48.1, from 48.3 in October. A reading below 50 indicates contraction and economists polled by Reuters had been forecasting a rise to 49.2.

Sentiment was also bruised after US President Donald Trump said he will reimpose tariffs on imports of steel and aluminium from Brazil and Argentina, claiming devaluation of those countries' currencies had made it harder for US farmers to compete.

The two countries have become alternative suppliers of soybeans and other agricultural products to China during that country's long-running trade dispute with the US.

"While there has been some improvement in global sentiment recently, these developments alongside a still-soft global activity pulse - particularly manufacturing and investment - suggest we are not out of the woods yet," ANZ economist Mikes Workman and strategist Sandeep Parekh said in a client note.

The weaker greenback built on gains the kiwi made yesterday after New Zealand's terms of trade, which measure the purchasing power of exports relative to imports, jumped 1.9 per cent in the three months ended September. That was almost twice the 1 per cent gain economists had been expecting.

The local dollar also extended its gains against its Australian counterpart. Reports there yesterday showed housing consents fell 8.1 per cent in October while job ads fell 1.7 per cent in November.

The New Zealand dollar has been mired near 64 US cents in recent weeks, supported by the Reserve Bank's decision last month to keep the official cash rate on hold but capped by growing scepticism that an interim trade deal between the US and China will be completed before year-end.

US commerce secretary Wilbur Ross told Fox overnight that the talks have a "logical deadline" of Dec. 15. "If nothing happens between now and then, the president has made quite clear he'll put the tariffs in – the increased tariffs."

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China has insisted the existing tariffs need to be rolled back as part of the interim deal.

The kiwi is now at its highest since early August against both the US and Australian currencies.

Nick Smyth, interest rate strategist with BNZ, said the kiwi had gained relatively more than the Aussie in recent months from commodity price gains, with another lift in dairy prices expected at this week's Global Dairy Trade auction.

While economists aren't expecting the Reserve Bank of Australia to cut interest rates when it meets later today, the odds of an easing there are "much higher" than by the Reserve Bank of New Zealand, he said. New Zealand Finance Minister Grant Robertson at the weekend signalled a major infrastructure spending programme, to be detailed on Dec. 11.

"The prospect of a major fiscal stimulus in NZ should reduce the risk that the RBNZ needs to cut the OCR again, at least for domestic reasons," Smyth said in a note to clients.

The New Zealand dollar was trading at 95.35 Australian cents from 95.12 last night, at 58.68 euro cents from 58.50, at 50.26 British pence from 49.92, at 70.85 yen from 70.71, and at 4.5761 Chinese yuan from 4.5308.

- BusinessDesk