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$A still higher on inflation data

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Published on: Thursday, January 23, 2014

by AAP

The Australian dollar is holding onto the gains it made on stronger than expected inflation data, which has ruled out any rate cuts by the Reserve Bank of Australia in the near future.

At 1200 AEDT on Thursday, the Australian dollar was trading at 88.39 US cents.

That was down slightly from 88.59 cents at 1700 AEDT on Wednesday, but well above the 87.90 US cents it was trading at earlier in the day before the release of inflation data.

The consumer price index (CPI) rose 0.8 per cent in the December quarter, for an annual rate of 2.7 per cent, above what economists had forecast.

The higher than expected figure means further rate cuts from the Reserve Bank of Australia in the near term are highly unlikely, economists say.

"The numbers came in pretty strong and that pares back those expectations of a rate cut from the RBA," Easy Forex senior dealer Francisco Solar said.

"That's helped push the Aussie back above 88 US cents."

Meanwhile, Australian bond futures prices were lower.

At 1200 AEDT on Thursday, the March 2014 10 year bond futures contract was trading at 95.850 (implying a yield of 4.150 per cent), down from 95.865 (4.135 per cent) on Wednesday.

The March 2014 three-year bond futures contract was at 96.950 (3.050 per cent), down from 96.970 (3.030 per cent).


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