The New Zealand dollar skidded to near four-year lows on Monday after a dismal survey of business confidence suggested the central bank may have to do more to revive growth and investment. The Australian dollar was also weak ahead of an interest rate decision by the central bank, which is expected to ease policy to an all-time low of 0.75%.
The kiwi was down 0.44% by 0357 GMT, at $0.6266. It went as deep as $0.6257 after the ANZ survey showed business confidence had plummeted to an 11-1/2-year trough. The kiwi is now within a whisker of a four-year low of $0.6255 touched last week.
The Australian dollar was down 0.15% at $0.6757 with financial futures pricing in a 76.5% probability of a policy easing by the Reserve Bank of Australia (RBA) at its October 1 policy meeting.
Australian government bond futures were mixed, with the three-year bond contract unchanged at 99.33. The 10-year contract slipped 2.5 ticks at 99.035. The fall in business confidence came despite a larger-than-expected cut to the official cash rate (OCR) by the Reserve Bank of New Zealand (RBNZ) last month, to a record low of 1%.
"Persistently weak sentiment maintains the case for additional policy support," said Mark Smith, a senior economist at ASB Bank. "We expect the RBNZ to cut the OCR another 25 basis points in November 2019, to 0.75%, with growing risk of further cuts beyond."
Financial markets are pricing in a two in three chance of a cut to 0.75% in November. Investors will next keep an eye on a quarterly survey of businesses from the New Zealand Institute of Economic Research due on Tuesday. A majority of 35 economists polled by Reuters expect the RBA to cut the cash rate for the third time this year. The Aussie has been on a downtrend since the middle of this month after minutes of the RBA's September meeting showed its board was prepared to ease policy again if needed.