Peter Cavanaugh, the senior client advisor at Bancorp Treasury Services, says currency markets reacted immediately to the minutes from the Reserve Bank of Australia's last meeting and the New Zealand dollar was dragged down with the Australian dollar.
Capital Economics says the minutes noted that global GDP growth eased in the second half of 2018 and that in a number of economies, including Australia, there is a tension between weak activity and strong employment data.
"Policymakers seem to be getting more worried about the impact of the housing downturn on the economy: they noted that the slowdown in consumption growth in the second half of the year was driven by items that have historically been most correlated with housing prices and housing turnover," the research house says.
"What's more, the bank's assessment seems to be that the downturn is spreading beyond Sydney, Melbourne and Perth, as it noted that house prices had declined a little in most other capital cities."
It says the RBA is getting less confident in its view that the labour market will continue to strengthen and that forward indicators of labour demand have been mixed.
"Crucially, the bank discussed a scenario where 'inflation did not move any higher and unemployment trended up.' Our view that GDP growth will continue to fall well short of its sustainable rate suggests that such a scenario will materialise before long."
Capital Economics is forecasting the RBA will start cutting its cash rate - from 1.5 per cent currently - starting in August and that it will be down to 0.75 per cent by early next year.
Cavanaugh says the only other driver of trading today was "a bit of nervousness and positioning" ahead of the release of the consumers price index tomorrow.
The Reserve Bank of New Zealand has forecast a quarterly increase of 0.2 per cent for the March quarter while the market is mostly expecting a 0.3 per cent rise.
Earlier today, Bank of New Zealand said it expected a 0.4 per cent increase, taking the annual inflation rate to 1.8 per cent.
Another possible driver of trading could be the results of the latest Global Dairy Trade auction due out early tomorrow, New Zealand time.
The headline GDT index has risen in each of the past nine auctions and is now 22 per cent higher than it began this year.
The trade-weighted index was at 73.22 points from 73.19. The kiwi was at 51.62 British pence from 51.61, at 59.77 euro cents from 59.81, at 75.65 Japanese yen from 75.73 and at 4.5342 Chinese yuan from 4.5341.
The New Zealand two-year swap rate rose to 1.7061 per cent from 1.7000 yesterday while the 10-year swap rate edged up to 2.2950 per cent from 2.2930.
