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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 26-year high.

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 preceding quarter.

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 long-term uncertainty.

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.

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