The New Zealand dollar skidded on Thursday after a gauge of business confidence fell again in August to hit a decade low, while the Australian currency eased on disappointing capital expenditure data.
The kiwi NZD=D3 snapped four straight sessions of gains to stumble 0.7 percent to $0.6659, the weakest since Aug. 24. It was last down 0.6 percent at $0.6669.
Traders feared a slump in business sentiment would hurt hirings and spending which would in-turn dampen New Zealand's economic growth.
A net 50.3 percent of survey respondents expected economic conditions to deteriorate in the year ahead, the ANZ Bank survey showed, the most pessimistic result since April 2008 and a decline from July's 44.9 percent.
"It seems increasingly inevitable that wariness amongst firms will have real impacts, in the near term at least, as investment and employment decisions are deferred," said Sharon Zollner, chief economist at ANZ Bank.
New Zealand central bank governor Adrian Orr has said an economic slowdown could force the bank to further ease policy from current record lows of 1.75 percent.
Across the Tasman Sea, the Australian dollar AUD=D3 slipped about a third of a U.S. cent to $0.7276 after official figures showed business investment surprisingly fell 2.5 percent. Analysts had expected a 0.6 percent gain.
Spending on equipment, plant and machinery dipped 0.9 percent and will prove a small drag on economic growth in the second quarter.
"It is still early days, but a continuation of this trend would be concerning," Daniel Gradwell, a Melbourne-based senior economist at ANZ, said in a note to clients.
"The outlook now suggests that capex will rise only marginally in 2018/19, down from the 5 percent growth expected in the Q1 report," he said.
Business associations were dismayed last week when the Liberal Party, which controls Australia's conservative government, ousted Prime Minister Malcolm Turnbull and replaced him with former treasurer Scott Morrison.
New Zealand government bonds
0#NZTSY= gained, sending yields about 4-5 basis point lower across the curve.Australian government bond futures were mixed, with the three-year bond contract YTTc1 unchanged at 97.980. The 10-year contract YTCc1 eased 2 ticks to 97.430.
