The Australian dollar climbed to its strongest level in more than three weeks as Asian stocks gained after Federal Reserve Chairman Ben S. Bernanke eased concerns the U.S. economy may stall. The so-called Aussie appreciated against 15 of its 16 major peers before a report tomorrow that is forecast to show Australian building approvals increased in July by the most in four months and after traders trimmed bets that the Reserve Bank will reduce its benchmark interest rate this year. New Zealand’s dollar advanced before a U.S. report that economists said will show consumer spending rose last month. “Expectations of rate cuts in Australia have been wound down and improved risk appetite following Bernanke’s comments last week is supporting the Aussie,” said Janu Chan, an economist in Sydney at St. George Bank Ltd. Australia’s dollar strengthened to $1.0618 as of 1:54 p.m. in Sydney from $1.0573 in New York on Aug. 26 and earlier touched $1.0626, the most since Aug. 4. It gained 0.5 percent to 81.48 yen and earlier reached 81.52, the strongest since Aug. 8. New Zealand’s dollar climbed to 84.41 U.S. cents from 84.07 cents last week and reached 84.49 cents, the most since Aug. 5. It gained 0.5 percent to 64.78 yen. The MSCI Asia Pacific Index rose 1.7 percent. Standard & Poor’s 500 futures indicate U.S. stocks may extend last week’s gains after Bernanke on Aug. 26 signaled the economy isn’t weak enough to warrant additional stimulus. U.S. consumer spending is likely grew 0.5 percent in July according to economists surveyed by Bloomberg before today’s Commerce Department report. RBA Rates Outlook Benchmark interest rates are 4.75 percent in Australia and 2.5 percent in New Zealand, compared with as low as zero in the U.S. and Japan, attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits. Trading in cash-rate futures shows investors are betting the Reserve Bank of Australia will cut its key rate to 3.92 percent by December, compared with wagers on a 3.86 percent level last week. RBA Governor Glenn Stevens said Aug. 26 that inflation “bears careful watching,” easing speculation the central bank will cut interest rates. He also said China remains “pretty solid,” supporting the Australian economy amid global turmoil. “The market needs to continue to push a little bit closer to a more realistic profile for RBA cash rate, so that’s a potential support for the Aussie,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. Westpac expects the central bank to cut interest rates by 25 basis points by the end of the year. Australian home-building approvals rose 2 percent in July, according to the median forecast of economists in a Bloomberg News survey before tomorrow’s report from the bureau of statistics. Aussie Resistance Australia’s dollar is poised to face so-called resistance near a three-week high versus its U.S. counterpart, JPMorgan Chase & Co. said, citing trading patterns. The currency will find sellers toward the $1.0640 level, Niall O’Connor a New York-based technical analyst at JPMorgan wrote in a note to clients today. That area includes the 61.8 percent Fibonacci retracement of the Aussie’s decline from $1.1081 on July 27 to 99.28 U.S. cents on Aug. 9, he wrote. A break of that level would target the 76.4 percent retracement at $1.0809, Bloomberg data show. “A sustained break of $1.0600 to $1.0640 zone for the Australian dollar remains necessary to argue that a deeper short term retracement can develop,” O’Connor wrote. Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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