Australian Dollar Rises as Building Approvals Unexpectedly Gain

Australia's dollar rose, reversing a loss, after a government report showed home-building approvals unexpectedly surged in November by the most in nine months., Bloomberg 1/8/2008 6:39:44 AM

The currency gained from the weakest in two weeks as traders raised the odds the Reserve Bank of Australia will increase its 6.75 percent key interest rate in the next 12 months. Australia's dollar had declined earlier after a measure of commodity prices fell the most in three weeks yesterday.

The Australian dollar advanced 0.3 percent to 87.70 U.S. cents at 4:50 p.m. in Sydney from 87.44 cents late in Asia yesterday. It earlier touched 86.84 cents, the lowest since Dec. 24. The currency rose to 95.88 yen from 95.74 yen yesterday.

Investors expect the central bank will raise its overnight cash-rate target by at least a quarter-percentage point to 7 percent in the next 12 months, according to a Credit Suisse Group index based on trading in interest-rate swaps. The odds of a quarter-point increase within a year were 92 percent yesterday.

The Australian dollar is the second best performer of the 16 most-actively traded currencies since late New York yesterday after the Bureau of Statistics reported the number of approvals to build or renovate houses and apartments gained 8.9 percent from October when they slipped a revised 3.6 percent.

The currency also gained before a report that will probably show retail sales gained for a sixth month in November. Sales advanced 0.5 percent from October, when they climbed 0.2 percent, according to the median estimate of 16 economists surveyed by Bloomberg News. The Bureau of Statistics releases the report at 11:30 a.m. in Sydney tomorrow.

Australia's dollar earlier reached a two-week low after the Reuters/Jefferies CRB Index of 19 raw materials, including copper and gold, fell 1.1 percent, the most since Dec. 13. Australia's dollar is sensitive to fluctuations in the price of commodities, which add about 17 percent to the country's economy.

Australian Dollar Rises as Building Approvals Unexpectedly Gain