The New Zealand dollar slid to three-week lows on Wednesday after soft domestic inflation data and a sharp fall in global dairy prices raised questions about whether the Reserve Bank of New Zealand (RBNZ) would need to tighten much more this year. The kiwi's decline weighed on its Australian counterpart, which came under further pressure after a raft of data out of China failed to inspire Aussie bulls.
The kiwi fell as low as $0.8697, reaching levels last seen on June 25. It is down more than 1.5 percent from last week's high of $0.8839, making a test of the post-float peak of $0.8842 highly unlikely in the short term. Broad losses took the currency's trade-weighted index to a two-week low of 81.15. Tracking its kiwi peer, the Australian dollar eased 0.3 percent to $0.9339. It has returned to lows last seen on July 3 when the head of the Reserve Bank of Australia described the Aussie as being "overvalued by most measures".