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The Australian dollar rose to new highs against a range of currencies on Monday, lifted by a bruised US dollar, and upbeat data at home and in top export market China. The Aussie rose to a six-week high of $0.9318 and hit a 26-month high on the euro at 0.6442 euros. It rose to a new 15-month high of 86.11 versus the yen.
The Aussie's rise was fuelled by domestic data which showed that job ads jumped by the most in 31 months in December, indicating the jobs market is set for a solid pick-up. The jobs market outlook lifted expectations that the Reserve Bank of Australia (RBA) could raise interest rates by 25 basis points to 4.0 percent at its next policy meeting on February 2.
By late afternoon, the Aussie had edged off highs and traded at $0.9313. It was trading at 85.88 against the yen and 0.6412 versus the euro. Bond futures were pressured as investors saw a bigger chance for a February rate rise. Markets now see a 66 percent chance for a rate hike, up from 62 percent on Friday.
Strong trade data from China also kept the Aussie well in demand. Data showed China's imports of iron ore were up 22 percent for the month and 80 percent for the year, boding well for Australian exporters. The report cooled bets that US rates may rise sooner than expected and added to the Aussie's yield allure. At 3.75 percent, Australian rates are higher than those in the developed world.

Copyright Reuters, 2010

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