By Ashley Smith – The Australian and New Zealand Dollars are seeing a modest recovery today against the USD and JPY as demand for riskier currencies rebounded slightly on speculation Federal Reserve Chairman Ben S. Bernanke will be confirmed for a second term. The Aussie also benefited over economists’ expectations that a report due to be released on Jan. 27th will show annual inflation accelerated in the fourth quarter. The expected rise in inflation adds to speculations for further interest rate hikes by the Reserve Bank of Australia during this coming February’s meeting. Annual inflation probably gained to 2% in the fourth quarter. The central bank aims to keep inflation between 2 and 3% on average.
Australian Dollar rose 1% to currently trade at 81.75 Yen. It also gained 0.6% to 90.59 U.S. cents. The New Zealand Dollar climbed to 64.40 Yen and to 71.47 U.S. cents. New Zealand’s currency gained today after a report showed the nation’s services industry expanded for a second month on increased sales and new orders. However, while speculations of further interest rate hikes in Australia persist, such speculations for New Zealand dwindle, thus putting slight pressure on the currency. With inflation remaining moderate and a slightly shaky economic recovery, the central bank is not pressured to begin raising interest rates until the middle of this year.
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