The Australian dollar strengthened today even after a report showed that nation’s consumer price inflation stalled in the fourth quarter of 2011. The currency reached a record high since November against the yen as Japan’s trade deficit widened.
Australia’s consumer price index remained unchanged in the December quarter after rising 0.6 percent in the previous three months. Analysts expected a 0.2 percent growth. The trimmed mean CPI (core inflation that excludes volatile components) rose 0.6 percent. It’s strange to see the Aussie rises even after the not-so-good report and amid risk aversion, but the Forex market often works in an unpredictable manner.
There is nothing strange in the advance of the Australian currency versus the yen, though, as Japan’s trade balance deficit rose for the third consecutive month in December. The deficit was 567.6 billion yen in the past month, increasing from 534.2 billion in November. The growing shortfall makes Japan’s “safe” currency to look less safe.
AUD/USD went higher from 1.0488 to 1.0512 and EUR/AUD went down from 1.2422 to 1.2380 as of 5:04 GMT today. AUD/JPY climbed from 81.47 to 81.87 and reached 82.08 today — the highest rate since November 1.
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