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Aussie near 5 1/2-year low before CPI; Singapore dollar tumbles

Australia's dollar traded within one cent of a 5 1/2-year low before a report forecast to show consumer prices rose at the slowest pace since mid-2012.

[SYDNEY] Australia's dollar traded within one cent of a 5 1/2-year low before a report forecast to show consumer prices rose at the slowest pace since mid-2012.

The US currency pared its biggest loss against the euro since October before the Federal Reserve sets policy today. The greenback slid yesterday after US durable-goods orders unexpectedly decreased and corporate results fell short of analyst expectations. The Swiss franc rose against the euro as investors sought havens. Singapore's dollar tumbled after its central bank unexpectedly eased the slope of its currency band.

"The AUD sits at the bottom end of the G10 leader-board, and will continue to struggle on a relative basis ahead of the inflation report," Raiko Shareef, a markets strategist in Wellington at Bank of New Zealand Ltd, wrote in an e-mail to clients, referring to the Australian dollar and Group of 10.

The Aussie declined 0.4 percent to 79.09 US cents at 9:16 am in Tokyo from yesterday. It touched 78.55 cents on Jan 26, the least since July 2009. Singapore's currency dropped 0.8 per cent to S$1.3494 per US dollar.

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The US dollar rose 0.2 per cent to US$1.1355 per euro, after falling 1.3 per cent yesterday, the biggest drop since Oct 15. It reached the highest since September 2003 on Jan 26 at US$1.1098. The yen was little changed at 117.99 per dollar and gained 0.1 per cent to 133.98 per euro.

Australia's consumer-price index probably moderated to a 1.8 per cent gain in the fourth quarter from a year ago, the slowest pace since the second quarter of 2012.

The dollar weakened against the euro for a second day yesterday after the 3.4 per cent drop in December durable goods - items meant to last at least three years - followed a 2.1 per cent slide the prior month, data from the Commerce Department showed. The median forecast of economists surveyed by Bloomberg News estimated orders would rise 0.3 per cent.

The Standard & Poor's 500 Index of stocks fell 1.3 per cent in New York on weaker-than-forecast results from Caterpillar Inc. to Microsoft Corp.

"The durable-goods report was clearly not as strong as anticipated," said Jennifer Vail, head of fixed-income research at US Bank Wealth Management, which manages US$122 billion in assets. "The other item that's probably impacting the market today and further amplifying the safe-haven trade is that we're finally starting to see some impact to domestic earnings via the stronger dollar." The Bloomberg Dollar Spot Index, a gauge of the currency's performance against 10 major peers, slid 0.6 per cent to 1,154.57 yesterday. It closed at 1,161.42 in New York on Jan. 26, the highest in data back to 2004.

The Fed is forecast to leave interest rates unchanged at the two-day policy meeting that ends today, a Bloomberg survey of economists shows. The chance of a interest-rate increase by the October meeting was 51 per cent, futures data showed. The odds were 72 per cent at the end of last year.

The Swiss franc gained 0.2 per cent to 1.0253 per euro.