Australia’s dollar climbed to the strongest in more than a week after data today showed the January trade surplus widened to the most in 2 1/2 years and retail sales rose three times faster than economists forecast.
The Australian dollar’s rally in the past month to be the developed world’s best-performing currency, driven by the Reserve Bank’s faith in the economy, will be put to the test by a survey of investment plans due out tomorrow.
When Bank of England Governor Mark Carney presents his quarterly economic forecasts this week, he faces a challenge similar to that faced by his colleagues at the Federal Reserve: how to convey the probable path of policy as stronger-than-expected growth moves up the likely date for reaching thresholds for considering an interest-rate increase.
Australia’s dollar gained against most of its major peers amid speculation the Reserve Bank may not cut interest rates further after Governor Glenn Stevens said there are signs that loose policy is supporting spending.
Unemployment in the U.K. fell to the lowest level since April 2009, China’s economy cooled and U.S. sales of existing homes last year were the strongest since 2006, economic reports are projected to show this week. Elsewhere, price data will dominate, with Brazil likely to show consumer inflation in the month through mid-January rising by the most in a year, while pricing power in Australia also picked up in the fourth quarter.
Australia’s dollar rallied from the lowest in more than 19 months after data showed building approvals grew more than economists estimated, reducing the case for the Reserve Bank to cut interest rates.
Data this week will probably show retail sales in the U.S. rose in November by the most in five months, while factory production in the U.K. grew in October for a second consecutive month. Elsewhere, the Chilean presidential election may determine whether the country’s companies boost spending, and Australia’s conservative government will probably issue its midyear fiscal review.
New Zealand’s central bank cut its benchmark interest rate to a record low, reducing the attractiveness of the nation’s assets as officials from Beijing to London move to contain inflation by raising borrowing costs.