New Zealand dollar under pressure as bond yields slide

SYDNEY, Oct 15 (Reuters) - The New Zealand dollar was pinned near six-month lows on Wednesday as the country's central bank reiterated it remained open to more rate cuts after a jumbo move last week, sending local bond yields to multi-year lows.

The kiwi edged up 0.1% to $0.5720 NZD=D3, having hit a six-month trough of $0.5684 overnight. It appears to be enjoying support at 57 cents, but resistance lies at $0.5770.

The Aussie, meanwhile, rebounded 0.4% to $0.6511 AUD=D3, back above a key support level of 65 cents, after sliding to as far as $0.6440 overnight on renewed trade tensions between the United States and China.

The rebound was in part helped by the broad weakness in the U.S. dollar after Federal Reserve Chair Jerome Powell flagged the end of quantitative tightening and spoke about a weak labour market. FRX/

At a Citi investment conference on Wednesday, Paul Conway, chief economist at the Reserve Bank of New Zealand, said that the current interest rate of 2.5% was at the lower end of its neutral range. But he later told Bloomberg TV that policymakers are open to further rate cuts if necessary.

That sent two-year swap rates NZDSM3NB2Y= down 6 basis points to 2.4625%, the lowest since early 2022. Ten-year government bond yields NZ10YT=RR fell 5 bps to 4.060%, the lowest since May 2023.

Markets imply around an 83% probability of a rate cut to 2.25% in November, with some betting on a terminal rate of 2%. 0#NZDIRPR

"Having made a fresh low, NZD price action doesn’t look promising, even if there is more confidence among analysts that the economy might be past peak pessimism," said analysts at ANZ.

At the same Citi event, Reserve Bank of Australia Assistant Governor Sarah Hunter reiterated that recent data has been a tad stronger than expected, but the central bank is setting policy over the next one to two year horizon.

Governor Michele Bullock will be speaking Thursday morning at a Nomura event in Washington, while Assistant Governor Christopher Kent will deliver a speech in Sydney at 8:45 am.