By Wayne Cole
SYDNEY, Aug 29 (Reuters) - The New Zealand dollar slipped to a four-year trough on Thursday after a survey showed businesses in the country were gloomier than at any time in the past decade, nudging bond yields back toward historic lows.
The Australian dollar held up a little better at $0.6730 AUD=D3 as domestic data proved mixed rather than awful, though again yields were falling as uncertainty gripped global markets.
The kiwi NZD=D3 was off 0.3% at $0.6318, after touching its lowest since September 2015 at $0.6311.
The latest lurch lower came when ANZ Bank's closely-watched survey of businesses showed deepening weakness in both activity and confidence, suggesting aggressive cuts in interest rates were yet to gain any traction.
"The outlook for the economy appears to be deteriorating further, with firms extremely downbeat despite easier monetary conditions, fairly robust commodity prices, and positive population growth," said Sharon Zollner, ANZ's chief economist.
"Whatever the cause, the risk is rising that it becomes self-fulfilling."
That will be a disappointment for the Reserve Bank of New Zealand (RBNZ) which cut rates by a sharp 50 basis points early this month with the express intention of shoring up confidence.
Markets imply around an 80% chance the RBNZ will have to cut by a further quarter point to 0.75% in November, and will eventually reach 0.5% sometime next year. RBNZWATCH
Yields on two-year notes NZ2YT=RR are already down at 0.80%, having dived 40 basis points since mid-July.
Investors are pricing in similar easings from the Reserve Bank of Australia (RBA), with a quarter-point cut to 0.75% fully priced in by November and 0.5% by March 0#YIB:.
Data out Thursday showed business investment dipped a soft 0.5% in the June quarter, but a 2.5% jump in spending on equipment still promised to make a useful contribution to economic growth.
Firms also revised up spending plans for 2019/20, a solid result given how the Sino-U.S. trade war is causing so much uncertainty for business globally.
"If this expenditure materialises, business investment will be a significant driver of growth over the next twelve months and lift momentum from its current low levels," said Sarah Hunter, chief economist for BIS Oxford Economics.
"But it's unlikely to change the trajectory of the cash rate."
Australian three-year bond yields AU3YT=RR of 0.67% clearly anticipate more easing, as does the 10-year AU10YT=RR at 0.869%.
(Editing by Shri Navaratnam)
((Wayne.Cole@thomsonreuters.com; 612 9321 8162; Reuters Messaging: firstname.lastname@example.org))
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