By Naomi Tajitsu and Cecile Lefort
WELLINGTON/SYDNEY, Sept 10 (Reuters) - The New Zealand dollar tumbled on Thursday after the Reserve Bank of New Zealand (RBNZ) cut interest rates and flagged further easing, dragging its Australian counterpart lower.
The kiwi NZD=D4 dropped around 2 percent to $0.6278, pulling closer to a six-year trough below 62 cents. The slide came after the RBNZ reduced its benchmark rate by 25 basis points to 2.75 percent, as widely expected, and signalled more easing if economic growth continued to slow.
The central bank acknowledged that a sharp depreciation in the kiwi in past months was providing some support to the economy, and forecast the kiwi would fall an additional 5 percent on a trade-weighted basis over the next year.
"They talked the currency lower still, they painted the impression that they could cut rates lower if they needed," said Tim Kelleher, head of institutional FX sales at ASB Bank in Auckland.
The kiwi plummeted 2.3 percent against the yen to 75.16 yen, while the euro flew 4 cents higher to NZ$1.7882.
Further losses in the kiwi were limited by demand from regional exporters below $0.6300. The longer-term outlook is lower, with some forecasting $0.6000 before the end of the year.
New Zealand interest rate futures and government bonds rallied, with government bond yields sliding as much as 6 basis points at the front end of the curve.
The Australian dollar was dragged 0.3 percent lower to $0.6979, having gone as deep as $0.6947 at one stage. It managed to trim losses after a better-than-expected jobs report at home supported the case for a steady policy outlook.
Australian employment jumped 17,400 in August, almost three times market forecasts, while the jobless rate eased to 6.2 percent.
Debt futures were little changed, having recently widened the odds for further cuts by the Reserve Bank of Australia (RBA). Interbank futures 0#YIB: give an around 50-50 percent chance of a move by December, while the majority of economists see a steady rate outlook through 2016.
Still, the Aussie outlook points to further decline as the U.S. Federal Reserve is expected to raise interest rates as early as next week, an event which will likely set a fire under the U.S. dollar.
The Aussie touched a 6-1/2-year low of $0.6892 earlier this week. Support was seen near $0.6920 with resistance at 70 cents.
The only bit of sunshine for the Aussie was against its beaten-down kiwi cousin. It leapt nearly 2 percent to NZ$1.1142.
Australian government bond futures were firm, with the three-year bond contract up 1 tick at 98.145. The 10-year contract added 3.5 ticks to 97.2675.
(Editing by Jacqueline Wong)