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Australian Dollar Weakens After Inflation Report

The Australian dollar drifted weaker against its major rivals in early Asian deals Wednesday after an official report showed that the nation's inflation rose less-than-expected in the fourth quarter.

Consumer prices in Australia were up 2.2 percent on year in the fourth quarter of 2012, the Australian Bureau of Statistics said today. That was shy of forecasts for an increase of 2.4 percent after rising 2.0 percent in the previous three months.

On quarter, prices were up 0.2 percent, also below expectations for an increase of 0.4 percent after climbing 1.4 percent in the third quarter. Core inflation rose by an average of 0.6 percent in the quarter.

The AUD position losses were limited to some extent shortly as traders digested the report that the inflation rate stood in the Reserve Bank of Australia's annual inflation target of between 2 percent and 3 percent.

Positive earnings figures from the U.S. and encouraging news regarding the budget woes in Washington helped lift equities in the initial hours of Asia-pacific trading.

DuPont, Travelers and Delta Air Lines all posted solid quarterly results. At the same time, the White House has indicated that President Barack Obama will not oppose a House Republican bill that would tie a short-term increase in the debt limit to the passage of a budget. The House is scheduled to vote on the bill later today.

The Australian dollar reached a 6-day low of 1.2532 against the New Zealand dollar following the data. With the pair approaching the trend line support of a descending triangle, the near-term support for the AUD/NZD is visible at 1.2520.

The Australian dollar drifted lower to 1.0545 against the US dollar and 93.41 against the yen following the data. The aussie also reached as low as 1.2635 against the euro and 1.0465 against the Canadian dollar around that time.

If the aussie extends downtrend, likely support levels are seen at 1.0450 against the Canadian dollar, 1.2572 against the euro, 92.60 against the yen and 1.06 against the greenback.

Traders look for China's December results for the Conference Board's leading and coincident indexes, which is due out shortly. In November, they were up 1.1 percent and 0.9 percent, respectively.

Besides, the Bank of Japan will release its monthly economic report later in the Asian session.

Eurozone consumer confidence, Bank of Canada rate decision and the U.S. house price index are expected to garner market attention in the upcoming sessions.

by RTTNews Staff Writer

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