Jan. 23 (BusinessDesk) - The New Zealand dollar firmed against the Australian dollar after a weaker-than-expected inflation report increased the chances of a an official interest rate cut by the Reserve Bank of Australia.
The kiwi was at 79.78 Australian cents at 5pm, up from 79.53 Australian cents at 8am.
The aussie dollar weakened on news that the headline consumers price index rose 0.2 percent to an annual rate or 2.2 percent, which was less than the 0.4 percent quarterly rise for an annual rate of 2.4 percent expected by traders.
The next Reserve Bank of Australia cash rate announcement is on Feb 5. The central bank watches an average of two underlying inflation measures - the trimmed mean and weighted median - in the data series.
The market was now assessing the chances of a rate cut in February at 36 percent, up from 32 percent before the report, Joe Capurso, currency strategist at Commonwealth Bank of Australia, said.
The kiwi was at 84.05 US cents at 5pm, up marginally from 84.04 US cents at 8am and little changed from 83.99 cents at 5pm on Tuesday.
It weakened further against the Japanese currency, 74.48 yen from 75.17, was at 63.14 euro from 62.93 and 53.09 British pence from 52.99.
The trade-weighted index was at 75.45 from 75.34.