The kiwi dipped after the Office of the US Trade Representative released a list of approximately US$200 billion ($303.5b) worth of Chinese imports that will be subject to additional tariffs. The tariffs will be effective starting September 24, initially at 10 per cent and then rising to 25 per cent from January 1.
However, the New Zealand dollar pared those losses when it appeared that China wasn't planning to immediately retaliate, although that could change, said Martin Rudings, a senior dealer in foreign exchange at OMF.
The South China Morning Post reported that China is likely to cancel its tentative plans to send Xi Jinping's top economic adviser to Washington, quoting a government source.
"That has set the cat among the pigeons" and will reignite fears of a protracted trade dispute, Rudings said.
The kiwi also remained steady against the Australian dollar after the Reserve Bank of Australia published minutes from its September 4 meeting. It was trading at 91.56 Australian cents from 91.60 late yesterday.
"They were quite upbeat on growth. They seem pretty comfortable with rates as they are," said Rudings.
Domestically the kiwi got an early lift after Prime Minister Jacinda Ardern mistakenly said she was "pretty pleased" with gross domestic product growth having received a "hint" ahead of Thursday's official release of the second-quarter economic data.
Her comments were then downplayed by her chief press secretary who said she was referring to the government's June year financial statements and had "made a mistake."
Economists expect the data to show GDP expanded 0.8 per cent from the first quarter and 2.5 per cent from a year ago, according to the median in a Bloomberg poll of 16. The central bank is tipping growth of 0.5 per cent.
"The market is already looking for a 0.7 per cent to 0.9 per cent lift and that may have just cemented that," regardless of whether the prime minister saw the number, said Rudings. As a result, anything lower will weigh on the kiwi.
Ahead of that, investors will be watching for the global dairy trade auction later in the global trading day, with milk futures pointing to a 3 per cent to 5 per cent slide in whole milk powder prices.
The kiwi was at 50.09 British pence from 50.08 pence yesterday. The local currency traded at 56.36 euro cents from 56.31 cents yesterday. It was at 4.5207 Chinese yuan from 4.5000 yuan yesterday and increased to 73.79 yen from 73.37 yen.
New Zealand's two-year swap rate rose 2 basis points to 1.99 per cent while 10-year swaps rose 3 basis points to 2.87 per cent.
