The New Zealand dollar lost ground ahead of the expected signing of phase one of a United States/China trade deal later today.

The kiwi was trading at 66.06 US cents at 5pm in Wellington from 66.24 at the same time yesterday, at 95.80 Australian cents from 96.00 and the trade-weighted index was at 72.32 points from 72.45.

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The New York Times is reporting that the trade deal is expected to include significant concessions to protect US technology and trade secrets, along with China's commitment to buy US$200 billion ($302.5b) worth of American goods and to allow greater access to Chinese markets for US firms.

However, Al Jazeera is reporting that the deal will leave existing tariffs in place – that includes US tariffs on US$370b of Chinese imports and Chinese tariffs on US$120b of good from the US.

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Martin Rudings, an adviser at OMF, said investors have been unwinding long kiwi positions against the Australian dollar that also have had the effect of weakening the kiwi against the greenback.

"It makes sense that the Aussie should have a relief rally" once some of the tensions between the two super powers that has been dogging foreign exchange markets for the last couple of years have been resolved, Rudings said.

The Aussie had been "the most beaten up" currency during the US/China trade war – because of its exposure to China, its biggest export market, the markets had treated the Aussie as a proxy for the Chinese economy.

The Australian dollar may gain a bit more ground against the kiwi in the short-term, but those gains will be limited by the outlook for interest rates in the antipodean countries, Rudings said.

While the market is pricing in a 36 per cent chance of a rate cut in Australia in February, and a more than 100 per cent chance of a cut by September, investors think there's minimal chance of further rate cuts in New Zealand, he said.

The Reserve Bank of New Zealand cut its official cash rate from 1.75 per cent to 1 per cent last year while the RBA cut its cash rate from 1.5 per cent to 0.75 per cent.

The RBA next meets on February 4 while RBNZ's next meeting is on February 12.

The New Zealand dollar was trading at 50.72 British pence from 50.98 yesterday, at 59.36 euro cents from 59.48, at 72.60 yen from 72.92 and at 4.5560 Chinese yuan from 4.5537.

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The two-year swap rate fell to a bid price of 1.1790 per cent from 1.1834, while 10-year swaps eased to 1.6425 per cent from 1.6600.