Australian Dollar Strengthens

The Australian Dollar strengthened after a three day losing streak after a government report revealing a rise in home building approvals, climbing twice as much as economists have expected in November 2006 figures show. The report caught forex trader’s attention and have increased bets that the RBA (Reserve Bank of Australia) will lift interest rates this year. The Australian dollar traded at about 78 cents at 5pm Sydney time compared with late New York trade last Friday night to lows of 77.88 cents. Recall that the Australian dollar reached 22 month highs on January 3 of 79.80 cents. Currency traders see about a 60 percent chance that the RBA will increase interest rates by mid-2007 compared with 48 percent late last week according to the 30-day inter-bank interest rate futures contracts. The three day drop in the Australian currency was largely due to two factors, a drop in commodity prices and last Friday’s strong US jobs data. Employers in the U.S. added 167,000 workers last month, following a 154,000 increase in November, the government said last Friday. Meanwhile, today’s building approvals figures from ABS (Australian Bureau of Statistics) have revealed that the number of approvals to build or renovate houses and apartments rose 4.1 percent from October to 12,739. The performance of construction index rose 4.5 points from November to 52.1, the Australian Industry Group and Housing Industry Association said in a report released in Canberra today. A reading above 50 indicates the building industry is expanding.