By Candice Zachariahs Jan. 6 (Bloomberg) -- Australia’s dollar rose to a two-year high versus the euro and advanced against the greenback as prices of commodities, making up more than half the nation’s exports, held near 14-month highs. The currency climbed against the yen as Australia’s home- building approvals rose in November at a faster pace than economists forecast. New Zealand’s currency was little changed versus the U.S. dollar after Auckland-based Fonterra Cooperative Group Ltd., the world’s largest dairy maker, said whole-milk powder prices slid. “The outlook for commodity prices in particular will be a key driver for sentiment toward the Aussie in coming months,” said Ray Attrill, global research director at Forecast Ltd. in Sydney. “The Aussie will still be one of the best-performing currencies. Commodity currencies will probably be leading the euro and other currencies.” Australia’s dollar gained 0.6 percent to 0.6385 against the euro at 11:13 a.m. in New York and touched 0.6386, the highest level since November 2007. The Aussie rose 0.5 percent to 91.69 U.S. cents, from 91.19 cents yesterday, when it reached 91.74 cents, the highest level since Dec. 14. The Aussie climbed 1.6 percent to 84.95 yen. New Zealand’s dollar traded at 73.46 U.S. cents, compared with 73.45 cents. The currency fetched 67.95 yen, compared with 67.36. Crude oil, Australia’s fourth-most-valuable commodity export, traded near a 14-month high in New York, and copper jumped to its highest price since August 2008. The Reuters/Jefferies CRB Index of commodities was at the strongest level since October 2008. Housing Report The number of permits granted to build or renovate houses and apartments in Australia increased 5.9 percent in November after dropping a revised 1.8 percent in the previous month, the Bureau of Statistics said. The median estimate of 11 economists in a Bloomberg survey was for a 3 percent gain. The New Zealand dollar was little changed after Fonterra said milk powder for March delivery decreased 6.8 percent to $3,282 a metric ton after five months of gains. The currency rallied 1 percent in December. Milk prices “took the shine off the New Zealand dollar,” said Danica Hampton, senior strategist at Bank of New Zealand Ltd. in Wellington. Fonterra accounts for about 40 percent of the global trade in butter, milk powder and cheese. Benchmark interest rates are 3.75 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. Australia’s government bonds fell. The yield on 10-year notes added four basis points, or 0.04 percentage point, to 5.66 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due in March 2019 slipped 0.25, or A$2.50 per A$1,000 face amount, to 97.12. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was unchanged at 4.58 percent. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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