The Australian dollar jumped to a three-week high on Tuesday following strong economic data and a rally in the price of iron ore, the country's top export earner. The Australian dollar climbed as high as $0.7651, a level not seen since November13.
Data out on Tuesday showed Australia's retail sales rose 0.5 percent in October, when analysts had looked for a 0.3 percent gain. Separate data from the Australian Bureau of Statistics (ABS) showed the country's A$1.7 trillion economy likely accelerated at 3 percent annual growth last quarter.
And, iron ore was set for its fifth straight day of gains with Dalian futures at the highest since September. The Aussie has fallen about 5 percent since hitting a more than 2-year peak of $0.8125 in September largely due to a rebound in the US dollar.
Across the Tasman Sea, the New Zealand dollar rose 0.6 percent to $0.6904 following a speech by Reserve Bank of New Zealand (RBNZ) governor Grant Spencer. Australian government bond futures slipped, with the three-year bond contract down 5.5 ticks at 97.980. The 10-year contract eased 5 ticks to 97.39.
All good news for the Reserve Bank of Australia (RBA) which is hoping for a stronger pick up in economic growth and inflation as it left interest rates at a record low 1.50 percent for a fifteenth straight meeting. Gross domestic product data is due Wednesday.
"Tomorrow brings another piece of the puzzle, in the form of the Q3 GDP print," said Paul Bloxham, Chief Economist for Australia and New Zealand at HSBC. "This would be an above trend pace of growth and we expect growth of over 3 percent to continue in coming quarters." The RBA also sounded more relaxed about the level of the Australian dollar, saying the currency remains within the range seen over the past two years.
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