Forexpros - The New Zealand dollar dipped against its U.S.
counterpart on Monday, but remained close to a 26-year high after
stronger-than-expected inflation data boosted expectations for a
near-term interest rate hike by the country's central bank.
NZD/USD pulled back from 0.8490 during late Asian trade, the pair's
highest since July 14, to subsequently consolidate at 0.8450,
edging 0.07% lower.
The pair was likely to find support at 0.8151, the low of July 13
and short-term resistance at 0.8504, the high of July 14 and a
Earlier in the day, Statistics New Zealand said in a report that
consumer price inflation rose 1.0% in the second quarter of 2011,
above expectations for a 0.8% gain.
Consumer prices rose at an annualized rate of 5.3%, stronger than
the expected increase of 5.1% and faster than the 4.5% gain in the
The upbeat data boosted expectations for a near-term interest rate
hike by the Reserve Bank of New Zealand after official data showed
last week that the country's economy grew by 0.8% in the first
quarter, more than doubling expectations for a 0.3% gain.
At present, benchmark interest rates are 2.5% in New Zealand,
compared with zero in the U.S., attracting investors to the
nation's higher-yielding currency.
Meanwhile, concerns mounted over a potential U.S. sovereign debt
default after U.S. President Barack Obama said over the weekend
that the U.S. government was "running out of time" in regards to
negotiations over lifting the country's USD14.3 trillion debt
ceiling before an August 2 deadline.
Former U.S. Treasury Secretary Larry Summers said that a U.S. debt
default would cause panic throughout the financial system and
The kiwi was also higher against its Australian cousin, with
AUD/NZD shedding 0.31% to hit 1.2558.
Later in the day, the U.S. was to publish a government report on
the balance of domestic and foreign investments.