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Forex - NZD/USD down despite higher Q4 inflation

Published 01/20/2014, 06:19 PM
Updated 01/20/2014, 06:22 PM

Investing.com - The New Zealand dollar fell during morning Asian trade on Tuesday, easing after an initial spike following fourth quarter inflation figures that rose more than expected.

Data released by Statistics New Zealand showed inflation rose 0.1% in the fourth quarter and up 1.6% on year, taking annual inflation up to a level last seen in the first quarter of 2012. Market expectations were for a 0.1% drop on the quarter and gain of 1.5% on the year. The inflation gain could put pressure on the Reserve Bank of New Zealand to hike its official cash rate in early 2014 on accelerating economic growth amid housing and other capacity constraints.

Later today the Bank of Japan is scheduled to start its two-day policy board meeting with a decision due on Wednesday. The Bank of Japan's nine-member board is expected to stand pat on monetary policy and may say downside risks in overseas markets have eased from the state of play seen in the semi-annual Outlook Report issued in October.

AUD/USD traded down 0.04% at 0.8807, USD/JPY traded down 0.02% at 104.15, and NZD/USD traded down 0.05% to 83.20.

On Monday, the euro remained under pressure amid concerns that the subdued inflation outlook for the euro zone may prompt the European Central Bank to ease monetary policy further in order to safeguard the fragile recovery in the region.

The loonie, as the Canadian dollar is also known, remained under pressure amid expectations that the Bank of Canada will stick to its dovish stance on rates at this week’s policy meeting.

The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.13% to 81.24.

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