SYDNEY: The New Zealand dollar slipped on Tuesday after an easing in inflation expectations trimmed some of the bets around a possible rate hike, while the Australian dollar struggled amid mixed local data.

The kiwi dollar fell 0.5% to $0.6098, having also eased 0.3% overnight as the talks of another rate hike faded a little. It now has support at $0.6080, while resistance is at around $0.6150.

Data showed on Tuesday that New Zealand’s inflation expectations fell to more than two-year lows in the first quarter, suggesting that the aggressive streak of past rate hikes were able to contain high prices. Two-year swap rates duly retreated to 5.175%, off from its 2-1/2 month high of 5.245% hit on Monday.

“We don’t think the RBNZ will panic just yet,” said Kelly Eckhold, chief economist at Westpac New Zealand, adding that he still sees the cash rate peaking at 5.5% for this year.

“But forget about easings in 2024 - it just isn’t happening based on what we see now. And we might be back to tightening should conditions prove necessary.”

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Markets pared back their bets for a hike to just 15% when the RBNZ meets in late February, down from 40% a day earlier. They now see a modest easing of just 45 basis points this year, down from more than 80 bps at the start of the month.

The Australian dollar struggled for direction on mixed local data. It was 0.1% lower at $0.6522, having held mostly flat overnight in holiday thinned session.

Consumer sentiment in Australia jumped to a 20-month high in February on hopes that interest rates have peaked but business conditions softened to be below its long-run average.

In the broader forex market, trading was largely subdued in Asia with markets in China and Hong Kong still closed for holidays. The focus will be on U.S. consumer inflation data later in the day for more clues on the Federal Reserve’s monetary policy outlook.