By Anna Rascouet Nov. 2 (Bloomberg) -- The dollar fell against high-yielding currencies led by the Australian dollar as the global economic recovery showed signs of gaining traction. The so-called Aussie climbed versus 15 of the 16 world’s most-traded currencies tracked by Bloomberg after Australian Treasurer Wayne Swan said the economy will grow faster than forecast, adding to speculation the Reserve Bank will raise its benchmark interest rate tomorrow, and an HSBC Holdings Plc index showed Chinese manufacturing expanded at the fastest pace in 18 months. The Swedish krona and Canadian dollar also rose against the U.S. currency. The pound snapped five days of gains versus the euro after Royal Bank of Scotland Group Plc said government talks may lead to asset sales “not initially contemplated.” “The markets have taken a step back and said: hold on, the global economy is recovering and we’re not in an environment where risk aversion is going to shoot up on a sustained basis,” said Daragh Maher, London-based deputy head of global currency strategy at Calyon, the investment-banking arm of Credit Agricole SA. The Australian dollar rose to 90.48 U.S. cents as of 10:34 a.m. in London, from 89.97 cents at the end of last week. The Swedish krona strengthened to 7.0410 per dollar, from 7.0957. The pound dropped to $1.6387, from $1.6452 on Oct. 30. It also weakened to 90.12 pence per euro, from 89.44. Heading to Parity Australia’s economy will expand 1.5 percent, compared with a May prediction of a 0.5 percent contraction, in the 12 months ending June 30, 2010, Swan said today. An index measuring the weighted average of prices for established houses in eight Australian cities climbed 4.2 percent in the third quarter from the second, the Australian Bureau of Statistics said in Sydney. The Aussie, which soared 35 percent in the past 12 months, is heading to parity against its U.S. counterpart, according to Citigroup Inc., Calyon, Barclays Capital and National Australia Bank Ltd., as China’s economic growth lures investors into buying assets of the world’s biggest exporter of iron ore, used in making steel. The Aussie has soared 36 percent the past 12 months, more than any other currency tracked by Bloomberg. The yen also declined against higher-yielding currencies today as the improved outlook for the Chinese economy sapped demand for the Japanese currency as a refuge. The Shanghai Composite Index rose 2.7 percent after a purchasing managers’ index released by HSBC rose to a seasonally adjusted 55.4, from 55 in September. China’s own Purchasing Managers’ Index increased to a seasonally adjusted 55.2 in October, from 54.3 in September, the Federation of Logistics and Purchasing said yesterday in Beijing. Risk Positive “There is bright news about economies worldwide, as China’s PMI suggests the recovery in the nation’s economy is picking up,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. Ltd. in Tokyo. “It’s mildly positive for risk appetite and negative for the dollar and the yen.” The pound fell for a second day against the dollar and snapped a five-day gain versus the euro on speculation the Bank of England will extend its bond-buying program this week to revive Britain’s shrinking economy and Royal Bank of Scotland said it may be forced to sell more assets than planned. Sterling depreciated to more than 90 pence per euro for the first time since Oct. 28. Policy makers will expand their asset- purchase plan by 50 billion pounds ($82 billion) to 225 billion pounds on Nov. 5, according to the median forecast of 48 economists in a Bloomberg survey. The view of economists may not be adequately reflected in the currency’s price after gains last week, UBS AG said today. Earlier Gains The yen climbed earlier after CIT Group, the 101-year-old commercial lender, listed $71 billion in assets and $65 billion in debt in its bankruptcy protection, spurring investors to sell higher-yielding assets. Japanese Finance Minister Hirohisa Fujii said events in the U.S. are causing the yen to rise against the dollar and he is watching currency movements closely. Low interest rates in the U.S. and the bankruptcy filing of CIT Group are among the reasons Japan’s currency is rising against the dollar, Fujii told reporters in Tokyo today. U.S. taxpayers probably won’t recoup much, if any, of the $2.3 billion in government funds that went to CIT Group, Treasury Department spokesman Andrew Williams said in an e- mailed statement. “The U.S. financial system is far from being in perfect health,” said Mitsuru Saito, chief economist in Tokyo at Tokai Tokyo Securities Co. in Tokyo. To contact the reporter on this story: Anna Rascouet in London at arascouet@bloomberg.net

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