At noon (AEDT) on Tuesday, the currency was trading at 72.41 US cents, up from 71.95 cents on Monday.
Approvals for the construction of new homes rose 3.9 per cent in October, helped by a double digit gain in the multi units category, official figures show
It was much better than market expectations of a 3 per cent fall, and builds on the 2.3 per cent gain the previous month.
The currency was already well supported during the morning as traders anticipated that the Reserve Bank will keep the cash rate unchanged at 2 per cent when it makes its interest rate announcement on Tuesday afternoon.
But after the building approvals data was released the Australian dollar jumped a quarter of a US cent to peak at 72.48 US cents just before midday.
At 7am (AEDT) on Tuesday, the currency was trading at 72.34 US cents, up from 71.95 cents on Monday.
Early on Tuesday morning, it peaked at 72.50 US cents, before moving lower.
The RBA is almost certain to keep the cash rate at a record low of 2 per cent after governor Glenn Stevens last week clearly signalled he was prepared to wait for the first meeting in 2016 before considering another rate cut.
OM Financial senior client adviser Stuart Ive said the Australian dollar’s surge higher is largely to do with positioning ahead of the RBA meeting.
“I think the market is expecting Governor Stevens to come out with a very similar statement that we’ve seen recently, which is relatively upbeat,” he said.
Ive expects the RBA to stay positive about the local economy despite the iron ore futures price going below $US40 in Singapore yesterday and the currency edging higher.
“They may start toning down some of their language in coming meetings. In previous meetings, they’ve been upbeat about the diversification of the economy away from the mining sector,” he said.
Economic data out on Tuesday includes Chinese manufacturing data for November and Australian building approvals figures for October.
The Australian market looks set to open higher despite falls on Wall Street where shares dropped after a long weekend and ahead of a crucial jobs report on Friday.
At 6.45am (AEDT) on Tuesday, the December share price index futures contract was up 12 points at 5,198.
Locally, in economic news on Tuesday, the Reserve Bank of Australia holds its monthly board meeting and announces its interest rate decision. It also is due to release its index of commodity prices for November.
The Australian Bureau of Statistics releases October building approvals figures along with the September quarter’s balance of payments and international investment position, and the government finance statistics.
Meanwhile, the RP Data Core Logic’s Home Value Index and the Australian Industry Group’s performance of manufacturing (PMI) index, both for November, are due out, as is the ANZ-Roy Morgan weekly consumer confidence survey and the Dun and Bradstreet business expectations survey.
No major equities news is expected.
In Australia, the market on Monday closed lower as China’s economic slowdown weighed on prices for industrial metals such as copper, nickel and zinc.
The benchmark S&P/ASX200 index was down 36.1 points, or 0.69 per cent, at 5,166.5 points.
The broader All Ordinaries index was down 33.2 points, or 0.63 per cent, at 5,218.2 points.
NEW YORK – Wall Street stocks have opened higher at the start of a news-jammed week that includes a European Central Bank meeting and a US jobs report.
Five minutes into trade on Monday, the Dow Jones Industrial Average stood at 17,809.12, up 10.63 points (0.06 per cent).
The broad-based S&P 500 added 1.64 (0.08 per cent) at 2,091.75, while the tech-rich Nasdaq Composite Index rose 7.08 (0.14 per cent) to 5,134.60.
LONDON – Eurozone stock prices have remained on hold with all eyes on this week’s policy meeting of the European Central Bank, set to offer further stimulus to boost the single currency bloc.
Following Thursday’s ECB gathering, attention will turn to Friday’s US jobs data and the outcome of OPEC’s meeting on oil output levels.
Markets will keep a watch also over the two week-long Paris climate summit – a springboard for billion-dollar initiatives designed to leverage the huge investments for encouraging clean technology and helping poor countries go green.
“The COP21 climate change conference in Paris is occupying the attention of traders in a quiet session for economic data leading into the big events at the end of the week,” said Jasper Lawler, market analyst at traders CMC Markets.
“It seems likely a market-friendly… deal will get signed where it’s agreed to tackle climate issues without any specifics on financing and a specific target for emissions.”
As leaders huddled at the COP21 gathering on Monday Europe’s main indices crept up mid-afternoon before slipping back.
Frankfurt’s main DAX index added 0.8 per cent and Paris 0.6 per cent across the session, albeit just day highs – but London’s benchmark FTSE 100 index slid into the red, losing 0.3 per cent.
HONG KONG – Asia markets fell early, with investors nervous before the European Central Bank’s meeting at which it may extend its bond-buying program and cut its already negative deposit rate before shares later picked up.
“The market expects a broadening of the purchase program as well as a cut in the deposit rate, but expectations have gone quite far since we had rumours last week of a possible two-tier deposit rate cut,” said Norbert Wuthe, rate strategist at Bayerische Landesbank.
Worries over China, which hit Asian shares, also weighed on early trade in Europe.
Chinese stocks, which fell more than five per cent on Friday, were at one point down a further three per cent on Monday before closing marginally up on the day.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen and the Shanghai Composite both ended up 0.3 per cent.
China’s currency was also in the spotlight, with the yuan jumping in offshore trade on suspected intervention by Beijing hours before the International Monetary Fund is expected to grant it reserve status.
It last traded at 6.431 to the dollar, up 0.2 per cent on the day.
Tokyo’s Nikkei stocks index fell 0.7 per cent on concern over China and after Japanese industrial output data undershot forecasts.
WELLINGTON – The S&P/NZX 50 Index fell 0.87 points, or 0.01 per cent, to 6100.15.
ASX stocks to watch
BHP – BHP BILLITON:
RIO – RIO TINTO: The price of iron ore falls $US1.53 to below the $US43 mark.
BKL – BLACKMORES: Vitamin and supplement giant Blackmores will open its first flagship store in Sydney’s Bondi Junction following a year of record growth.
AAP
