The Australian dollar lost ground yesterday following inflation data released early in the morning UK time. The figures came in below forecasters predictions, and as a result reduced the chance of policy makers increasing interest rates in the near future. With forecasters almost unanimously predicting higher figures, we saw traders buying up the Australian dollar on Tuesday, but these gains were then reversed entirely following the release. We also had disappointing manufacturing data out of China which showed that this part of the Chinese economy had contracted for the fourth month in a row.
The Japanese yen and Swiss franc both performed well. Unexpectedly low US new homes sales figures combined with increasing tensions in Ukraine triggered a downward curb in global market confidence, and as a result we saw the traditionally safe-haven assets thrive. Last night we had an interest rate decision from New Zealand, which traders priced into the market yesterday as an increase was widely forecasted. This was duly delivered on with interest rates being increased to 3%.Trade balance figures from Switzerland are the only other significant data release.
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