SYDNEY: The Australian dollar was on the defensive on Thursday as losses in global equity markets sapped risk sentiment, while its New Zealand counterpart struggled to find any comfort in an upside surprise for economic growth at home.

Figures showed gross domestic product rebounded by 1.1 per cent in the third quarter, though that followed a 1.0 per cent drop the previous quarter leaving the economy almost flat for the six months.

The bounce was firmer than forecast by the Reserve Bank of New Zealand but still leaves the economy with plenty of excess spare capacity that should help restrain inflation.

"Much of the growth in the September quarter came from a recovery from a shock in the prior quarter," said Shannon Nicoll, an economist with Moody's Analytics. "Future growth won't be as fast."

"The RBNZ won't be stirred to hawkishness over this reading, but the GDP print should see the bank stand pat. It will be a long while before a hike is needed."

Investors responded by paring back the chance of an early hike in the 2.25 per cent cash rate next year, with a move by July implied at 40 per cent compared to 52 per cent before the data.

The kiwi dollar dipped 0.1 per cent to US$0.5764, and further away from last week's top of US$0.5831. Support now lies around US$0.5758 and US$0.5700.

The Aussie had eased back to US$0.6596, after losing 0.4 per cent overnight as equity markets slid. The currency is often used as a proxy for risk globally and has developed a close correlation to Wall Street in recent months.

The pullback from the recent three-month high of US$0.6685 risks a retreat to US$0.6550 and US$0.6419.

Markets are still wagering on at least one rise in the Reserve Bank of Australia's 3.6 per cent cash rate next year, with a move in February priced at 25 per cent, rising to 40 per cent from March and 70 per cent for May.

Minutes from the RBA's December policy meeting are due next week and will provide some colour around the board's deliberations about a possible future tightening and its concerns about inflation.

There was some mildly positive news for the bond market on the supply side, with the government cutting the amount of debt it plans to sell in 2025/26 by AUS$25 billion to AUS$125 billion (US$82.48 billion), reflecting increased tax receipts.