Australian Dollar Up After Stronger Inflation Data

The Australian dollar gained ground against other major currencies in early Asian deals on Wednesday, as better-than-expected inflation data for the fourth quarter dimmed hopes for interest rate cut by the Reserve Bank of Australia in the near future.

Consumer prices in Australia were up a seasonally adjusted 0.8 percent in the fourth quarter of 2013 compared to the previous three months, the Australian Bureau of Statistics said today.

That was higher than forecasts for an increase of 0.4 percent but slower than the 1.2 percent jump in the third quarter.

On a yearly basis, inflation climbed 2.7 percent – also topping expectations for 2.4 percent following the 2.2 percent gain in the three months prior.

The Reserve Bank of Australia’s trimmed mean and weighted median were both up 0.9 percent on quarter and 2.6 percent on year.

As the inflation rate now comfortably stays within RBA’s target of two to three percent range, investor speculation for further rate cuts dampened, thereby boosting the aussie.

Meanwhile, an index measuring consumer confidence in Australia dipped 1.7 percent in January, the latest survey from Westpac revealed on today – falling to a score of 103.3.

That follows the 4.8 percent monthly decline in December to 105.0.

The aussie climbed to a 6-day high of 0.8870 against the greenback, up from yesterday’s closing quote of 0.8809. The next possible resistance for the aussie is seen around the 0.90 zone.

The aussie rose to 0.9727 against the loonie for the first time since January 16. Further rally may lead the aussie to face resistance at the 0.98 area.

The aussie reversed from a 2-day low of 1.5429 against the euro, advancing to a 6-day high of 1.5298 shortly after the data was released. On the upside, 1.52 is likely seen as the resistance for the aussie.

The aussie appreciated to a 2-day high of 1.0666 against the kiwi, off early low of 1.0576. If the aussie extends gain, it may eye resistance around the 1.08 region.

The aussie spiked up to 92.49 against the yen, its highest level since January 16. The aussie may test resistance around the 93.5 mark.

Looking ahead, the Bank of Japan’s interest rate decision is due shortly. The central bank is forecast to stand pat on monetary policy.

At 10:00 am ET, the Bank of Canada will announce its decision on interest rates. The rates are expected to retain at 1.00 percent.

The material has been provided by InstaForex Company – www.instaforex.com

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