The New Zealand dollar dropped against the Australian dollar after unexpectedly strong inflation data across the Tasman prompted traders to wind back bets that nation's central bank could cut interest rates.
The kiwi traded at 93.23 Australian cents as at 5pm in Wellington, from more than 94 cents immediately before
the Australian consumer price figures were released and from 93.51 cents late yesterday.
The New Zealand dollar was recently at 74.51 US cents, little changed from 74.45 cents yesterday.Australia's trimmed mean gauge of core consumer prices rose 0.7 percent in the fourth quarter from three months earlier, against market expectations of a 0.5 percent gain.
The Reserve Bank of Australia next reviews interest rates next Tuesday and traders had bet it was prepared to cut the cash rate by some 37 basis points, based on the overnight index swap curve.
That was wound back to 10 points this afternoon."Investors had been betting inflation data would surprise on the downside and be the catalyst for the RBA to change its tone or even cut rates," said Raiko Shareef, currency strategist at Bank of New Zealand.
