The Australian dollar is slightly higher as it struggles to recover from losses made after the release of weaker-than-expected March quarter inflation figures.
Early Thursday, the local unit was trading at 92.91 US cents, up from 92.80 cents on Wednesday.
The currency fell to a two-week low of 92.68 US cents on Wednesday after official figures showed that the annual inflation rate was 2.9 per cent, lower than market forecast of 3.2 per cent.
The Australian dollar fell because a rate hike by the Reserve Bank of Australian looks less likely with inflation staying within the central bank’s two to three per cent target range.
National Australia Bank senior economist David de Garis said the data increased expectations that there will be an extended period of stability in the RBA’s cash rate.
“The RBA can breathe out again. This data is buying more time for them to remain on hold,” he said.
“The Australian dollar has been worst performing G10 currency over the past 24 hours, thanks to a softer-than-expected inflation reading.
“It’s been contained overnight and did not ease any further.”
After 0700 AEST, the Australian dollar fell a third of a New Zealand cent following the Reserve Bank of New Zealand’s (RBNZ) raising of its Official Cash Rate (OCR) for the second month in a row.
In a widely-expected move, the RBNZ raised the cash rate by a quarter of a percentage point to three per cent in a attempt to bring inflation under control.
At 0704 AEST, The Australian dollar was trading at 107.86 New Zealand cents, down from 108.24 cents just before the RBNZ decision was announced.
The New Zealand dollar also rose against the other major currencies.
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