New Zealand's two-year swap rate increased one basis point to 2.65 per cent at 5pm in Wellington, and 10-year swaps rose one basis point to 3.46 per cent.
The New Zealand dollar declined on concern about weak commodities after oil dropped and prices at the GlobalDairyTrade auction slid for a third straight session this year.
The kiwi touched a low of 64.60 US cents following the overnight dairy auction, and was trading at 64.89 cents at 8am in
Wellington, from 65.24 cents at 5pm yesterday. The trade-weighted index fell to 71.32 from 71.62 yesterday.
Commodity-linked currencies including the kiwi, Aussie and Canadian dollars fell after oil prices declined amid concerns weak global demand and ample supply will lower inflation and weigh on interest rates. The kiwi dipped after average prices at the GDT auction sank 7.4 percent with New Zealand's key product, whole milk powder, down 10.4 percent. The local currency then recovered some ground given the decline was close to the 5-to-10 percent range anticipated by NZX futures pricing.
"The risk-off setting shows up in foreign exchange movements, with the yen and the euro the strongest currencies and the commodity currencies amongst the weakest," Bank of New Zealand currency strategist Jason Wong said in a note.
"The New Zealand dollar dipped about 25 pips early this morning on the announcement of the latest GDT dairy auction showing an average price drop of 7.4 percent, and whole milk powder down 10.4 percent to US$1,952 per tonne. But the futures market was pointing to the possibility of a double-digit fall, so that result was no surprise and the New Zealand dollar soon recovered that loss."
