The kiwi was already weaker as global trade worries remain at the forefront of investors' minds but today's ANZ business confidence survey only added to the view that the Reserve Bank will not only keep the official cash rate on hold at 1.75 per cent tomorrow but will continue to signal no plans to lift it anytime soon.
New Zealand business confidence hit a seven-month low in the June survey with a net 39 per cent of businesses pessimistic about conditions in the year ahead, versus a net 27 that were pessimistic in the prior survey. Some economists even warned that if confidence remains weak, it could be the catalyst for an eventual rate cut.
"The longer business confidence remains low, the more questions that will be raised over the economic outlook. An official cash rate cut cannot be ruled out if this persists," said ANZ Bank New Zealand senior economist Mark Smith.
The survey weighed on the kiwi as "clearly confidence in the new government hasn't surfaced in business cycles as green agendas like the banning of oil exploration and industrial action weigh on sentiment," said Stuart Ive, senior dealer foreign exchange at OMF in Wellington.
Coupled with "expectations the Reserve Bank will continue with a dovish stance at tomorrow's review it is hardly surprising the kiwi is the weakest G10 currency on the board in the past 24 hours," he said.
While the move may be a little "buy the rumour sell the fact" given the looming global trade tiffs "the future looks anything but certain," he said.
The kiwi fell to 92.36 Australian cents from 92.96 yesterday. It was at 4.4961 Chinese yuan from 4.5174 yuan. It traded at 58.50 euro cents from 58.83 cents yesterday and fell to 51.55 British pence from 51.87 pence. It dropped to 74.98 yen from 75.45 yen.
New Zealand's two-year swap rate declined 4 basis points to 2.19 per cent while 10-year swaps fell 2 basis points to 3.06 per cent.
