The New Zealand dollar struck a six-month trough on Thursday after government data confirmed the local economy was slowing and inflation remained too low for comfort, making a rise in interest rates unlikely for months to come.
The kiwi dollar NZD=D4 was down at $0.6840, having shed 1 percent in the past 24 hours as speculators wagered the GDP report would be soft.
It got as deep as $0.6832, a level not seen since December last year. Support was now seen in the $0.6813/30 zone ahead of the 2017 nadir of $0.6781.
The Australian dollar AUD=D4 fared only a little better at $0.7363, just a whisker above one-year lows.
New Zealand's economy grew a modest 0.5 percent in the first quarter, held back in part by weakness in consumer spending.
Annual growth edged back to 2.7 percent, and much of that was due to a still rapidly expanding population. Growth per capita was just 0.6 percent for the year to March.
Analysts suspected the subdued outcome would keep the Reserve Bank of New Zealand sounding dovish when it sets interest rates next week.
"The slowdown in growth to date stands in contrast to the views of the Reserve Bank and the Treasury," said Westpac economist Michael Gordon.
"It provides some caution about the scope for additional fiscal spending, and reinforces that the case for rate hikes is some way off."
Neither does the Reserve Bank of Australia (RBA) sound in any hurry to be adjusting policy.
Speaking at a central bank event in Portugal on Wednesday, RBA Governor Philip Lowe was cautious on the outlook for a pick-up in wages.
"That leaves us with the possibility of accepting that inflation might just a bit lower than we'd like for a while," said Lowe. "That's difficult for the central bank to accept."
In bond markets, yields crept higher as a lull in the Sino-U.S. trade dispute eased risk aversion a little.
Australian government three-year bond futures YTTc1 dipped 2 ticks to 97.845, while the 10-year contract YTCc1 fell 3.5 ticks to 97.3050.
Yields on New Zealand government bonds
0#NZTSY= were up anywhere from 3 to 8 basis points.Dealers noted short-term Australian dollar rates BBSW had been pushed sharply higher amid a shortage of liquidity ahead of the financial-year end next week.
