The New Zealand dollar hit its weakest in six-months on Wednesday after the country's central bank cut interest rates to record lows and projected a chance of even lower rates in the future, sending bond yields to an all-time trough. The kiwi dollar was off 0.4 percent at $0.6571, having initially slid three-quarters of a cent to as low as $0.6525. It now has technical support around $0.6515.
The Aussie dollar took a brief hit on the news but soon rallied back to $0.7020, helped by gains against the kiwi. The Reserve Bank of Australia (RBA) skipped a chance to cut its rates on Tuesday. Yields on two-year paper dropped 8 basis points to an historic low of 1.34 percent, while one-year overnight indexed swaps fell 10 basis points to 1.36 percent. Swap markets implied only a one-in-five chance of another easing at the next policy meeting on June 26. Australian government bond futures were firmer as safe-havens globally benefited from the risk of an escalation in the Sino-US trade dispute.