SYDNEY/WELLINGTON: The New Zealand dollar eased on Wednesday after a private survey showed a sharp slide in business sentiment, while the Australian dollar held steady.
The New Zealand dollar softened to $0.8546 from $0.8564 earlier, after New Zealand business confidence slid to its lowest in seven months in May.
Earlier, the kiwi had perked up to a high of $0.8572 even as dairy giant Fonterra cut its initial forecast payout for the 2014/15 season by 17 percent on the back of falling global prices.
The kiwi is sensitive to news about the economically vital dairy sector, but the forecast payout of NZ$7.00 a kilo of milk solids was still the fourth highest.
"The market had expected a lower number so when the number came out at NZ$7 there was a bit of a relief rally that it was not as bad as some had feared," said BNZ senior strategist Kymberly Martin.
The kiwi was seen staying within recent ranges, supported at $0.8530, and more substantially at $0.8517, with resistance at $0.8600.
The NZ dollar also gave ground to the yen, falling 0.3 percent to 87.04, and the Aussie, which gained 0.2 percent to NZ$1.0833. The Australian dollar held firm at $0.9255, having touched a one-week high of $0.9278 overnight.
It continued to gradually recover from this month's fall from above 94 US cents.
It has shed 0.3 percent so far in May. It found some support following a surprising rise of 0.3 percent in Australian construction done against forecasts of a 0.2 percent fall.
More important data is due on Thursday with Australian business investments. Expectations centre on a fall of 1.4 percent for the first quarter, largely due to a decline in mining spending.
Ray Attrill, strategist at National Australia Bank, said the reading will come as no surprise to the Reserve Bank of Australia.
"They are already suggesting that non-mining capex outside housing construction is not showing signs of life." He said the results could move the Aussie although he added it was more likely to react to US data such as inflation.
Support for the Aussie is seen around $0.9200, then $0.9150, with resistance at $0.9278.
The Aussie kept gains against the yen at 94.33, having risen more than a yen since last week when it touched its lowest in two months.
New Zealand government bonds had a slight bid tone, with yields 2.5 basis points lower along the curve.
Australian government bond futures rose, with the three-year bond contract up a tick at 97.190.
The 10-year contract added 3 ticks to 96.285.
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