Investing.com – The Australian dollar rose against U.S. dollar on Wednesday after higher than expected inflationin the fourth quarter and weaker consumer confidence in January
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According to the Australian Bureau of Statistics, the country''s consumer price index for the fourth quarter rose by 0.8% against 1.2% in the earlier quarter. The expectation was of 0.5% quarterly increase. The year-on-year figure was 2.7% against earlier figure of 2.2% and an expectation of 2.5%.
Earlier, the Westpac-Melbourne Institute index of Australia’s consumer confidence fell 1.7% in January signaling that retail spending will remain weak.
At 0945 local time (0145 GMT) the flash HSBC China purchasing manager''s index for January comes out with a previous final reading of 50.5 for December.
The Bank of Japan is scheduled to detail the results of its latest monetary policy review at 1230 local time (0330 GMT) followed by a press conference by Governor Haruhiko Kuroda at 1530 local time (0630 GMT).
AUD/USD traded up 0.52% at 0.8851, USD/JPY traded down 0.06% at 104.22, and NZD/USD traded up 0.01% to 0.8314.
On Tuesday the U.S. dollar traded mixed to higher against most major currencies after the International Monetary Fund hiked its 2014 global growth forecast, while expectations for further cuts to Federal Reserve stimulus programs this month also bolstered the greenback.
In revisions to its World Economic Outlook report published on Tuesday the IMF said it expects the global economy to grow by 3.7% in 2014, up from an October forecast of 3.6% growth.
The news fueled expectations for central banks to wind down stimulus programs such as bond purchases going forward, the Federal Reserve especially, as the multilateral lending institution predicted the U.S. economy to expand 2.8%, up from an October forecast of 2.6%.
Many market participants expect the Fed to trim its quantitative easing program to USD65 billion from the current USD75 billion at its next policy meeting on Jan. 29.
Central bank bond purchases aim to prop up the economy by suppressing long-term interest rates, thus weakening the dollar as a side effect as investors flock to asset classes like stocks.