The New Zealand dollar dipped back below 67 US cents after a dismal business confidence survey and eased against the Australian dollar after the Reserve Bank of Australia held rates at a record low 1.5 per cent across the Tasman.

The kiwi dollar traded at 66.96 US cents as at 5pm in Wellington versus 67.05 cents as at 8:30am in Wellington and 67.70 cents late yesterday. It traded at 91.28 Australian cents from 91.73 cents yesterday.

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The kiwi came under renewed pressure when New Zealand business confidence hit a seven-year low in June as cost pressures weigh on profitability and the downbeat sentiment is beginning to impact on future planning.

The weak sentiment has led economists to lower their expectations for economic growth and to continue to speculate on a possible rate cut by the central bank.


"Weak business confidence and the risk it presents to GDP growth over the rest of 2018 suggests the odds of a rate cut (rather than hike) are growing," said ASB Senior Economist Jane Turner.

The RBA kept rates on hold and continued to signal that rates would be on hold for some time to come.

The RBA does expect an acceleration in wages growth and inflation over time, but the process will be slow.

"The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual," it said in a statement.

Looking ahead, investors will be watching for the minutes from the US Federal Open Market Committee as well as jobs data later in the week. Trading, however, will be quiet due to the July 4 Independence Day Holiday.

The New Zealand dollar traded at 74.22 yen from 74.96 yen and the trade-weighted index fell to 71.96 from 72.41. It was at 57.57 euro cents from 58.11 cents yesterday. It fell to 4.4873 yuan from 4.4932 yuan and dropped to 50.99 British pence from 51.39 pence.

New Zealand's two-year swap rate was unchanged at 2.14 per cent while 10-year swaps were unchanged at 2.99 per cent.