SYDNEY: The New Zealand dollar was testing two-year lows on Thursday as a dire business survey underlined the risk that rising interest rates would lead to recession, while the Australian dollar struggled against risk aversion globally.

The kiwi dollar was pinned at $0.6216, having shed 10% for the quarter and coming within a tick of its June trough at $0.6197. A break there could unleash a further retreat to at least $0.5920 support.

The Aussie was holding on grimly at $0.6893, after slipping as far as $0.6853. Chart support lies at $0.6850 and its May low of $0.6829.

The latest ANZ survey of New Zealand business sentiment made bleak reading with nearly 63% of firms expecting economic conditions to weaken over the coming year. The main drag was not a lack of demand but rather supply disruptions and surging cost pressures.

“In such a supply-constrained environment, it makes sense that inflation pressures are holding up even as the activity outlook slows,” said ANZ chief NZ economist Sharon Zollner.