The Australian dollar slipped on Wednesday after weaker-than-expected inflation data cemented views policy will remain accommodative for a long time to come, while its New Zealand cousin held near a one-week high.
The Australian dollar AUD=D4 was last down 0.3 percent at $0.7086.
It went as low as $0.7072 in the aftermath of Wednesday's figures which showed core measures of inflation closely watched by the central bank rose an average 1.75 percent in the third quarter compared with 1.9 percent in the second.
The headline consumer price index crawled at 1.9 percent for the year, in-line with forecasts but below the 2.1 percent pace in the second quarter.
Core inflation has now undershot the RBA's long-term target band of 2 percent to 3 percent for the 11th quarter on the trot, the longest run of misses on record.
As a result, the RBA has kept interest rates at an all-time low of 1.5 percent since August 2016.
Interest rate futures
0#YIB: do not fully price in a hike to 1.75 percent until March 2020.Analysts said the RBA is likely to look through the weakness in the third-quarter data as it was well flagged and included some one-off price decreases in government-administered services such as child care.
"But if Q4 is low it would be material for the RBA's 'next move is up' view," said George Tharenou, Sydney-based economist at UBS.
RBA Governor Philip Lowe has repeatedly signalled the next move in interest rates will be an increase. The last time the RBA tightened policy it was in November 2010 to 4.75 percent.
"Despite strong gross domestic product growth and falling unemployment, low CPI and (easing) house prices...(will) keep the RBA on hold till 2020," Tharenou wrote in a note to clients.
Across the Tasman Sea, the New Zealand dollar NZD=D4 held overnight gains to stay at $0.6547 - within kissing distance of a Tuesday's one-week high of $0.6572.
Earlier, a monthly survey of business confidence showed a slight improvement in sentiment for October from the previous month although firms remained pessimistic.
New Zealand government bonds
0#NZTSY= eased, sending yields 3.5 basis points higher towards the long end of the curve.Australian government bond futures slipped, with the three-year bond contract YTTc1 down 1.5 ticks at 97.955. The 10-year contract YTCc1 eased 3.5 ticks to 97.375.
