Dollar retreats from Aust, may have to wait for RBA in May for another tilt

The New Zealand dollar fell against the Australian dollar after Australian inflation data printed just above expectations giving the market little reason to add to bets for an early rate cut across the Tasman.

The kiwi fell to 98.74 Australian cents, having risen as high as 99.59 cents overnight, from 99.35 cents yesterday. The local currency traded at 76.80 US cents from 76.51 cents yesterday.

Australia's consumers price index rose 0.2 percent in the first quarter from three months earlier, against forecasts of 0.1 percent, while the so-called trimmed median year-on-year consumers price index rose 2.3 percent, beating forecasts for 2.2 percent. The inflation data had been seen as another opportunity for the kiwi to level peg with its Australian counterpart, and strategists said it is still within reach, with the Reserve Bank of Australia's May 5 meeting a possible catalyst.

"Parity is a significant psychological level for the market and probably one which will attract participants trying to breach it as well as those trying to defend it," said Imre Speizer, a strategist at Westpac Banking Corp. The inflation figures "spoiled the party for now but I think we'll get more stabs at it in the future."

Speizer said the Reserve Bank of New Zealand's review of interest rates on April 30 may not be a catalyst for parity because governor Graeme Wheeler is likely to be more dovish given the trade-weighted index is "very high."

The TWI was at 80.11 from 80.04 yesterday and well above the average 76.7 the Reserve Bank was projecting for the second quarter.

The kiwi fell to 71.52 euro cents, having reached a record high 72.02 cents overnight, from 71.28 cents yesterday.

"There's no sign of a turnaround," Speizer said. "The European Central Bank is printing lots of money and Greece is back in the spotlight."

The kiwi traded at 51.42 British pence, retreating from a three-month high of 51.79 pence overnight, from 51.37 pence yesterday. The Bank of England minutes to its last meeting are scheduled to be released today.

The New Zealand dollar traded at 91.80 yen from 91.34 yen yesterday.

(BusinessDesk)