Aussie Dollar Climbs on Housing-Data Strength as Deficit Narrows

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Australia’s dollar climbed against 12 of its 16 major peers after home loans grew more than economists estimated, fueling optimism about the economic recovery.

The Aussie is the third-best performer versus the dollar this month, even as the Reserve Bank of Australia lowered its target interest rate to a record-low 2 percent on May 5, the second cut this year. Australia’s currency held its advance as an annual budget statement showed the nation will record a narrower deficit next fiscal year than economists had forecast.

“We have seen a reasonable recovery in the Australian dollar, helped by the home-loans numbers overnight,”said Jeremy Stretch, head of currency strategy at Canadian Imperial Bank of Commerce in London. “This has encouraged the market into anticipating that perhaps the economy is looking firmer than what some might have been fearing.”

The Aussie rose 1 percent to 79.67 U.S. cents as of 10:47 a.m. in London. Australia’s currency climbed 0.9 percent to 95.575 yen.

Home-loan approvals climbed 1.6 percent in March from a month earlier, the statistics bureau in Sydney said Tuesday. Economists in a Bloomberg survey predicted a 1 percent increase.

CIBC’s Stretch said before the announcement that should Treasurer Joe Hockey’s budgetary numbers paint a “better backdrop,” then the Australian dollar could climb to 79.70 U.S. cents, although any hints of fiscal tightening could see the currency drop to 78.50 U.S. cents and could go even lower.

This month, Australia’s dollar has risen 0.8 percent against its U.S. peer, compared with gains of 2.2 percent for the pound and 1.2 percent for the Swiss franc.