The euro traded near a two-month high against the dollar and the yen before a report that economists said will show new industrial orders in the 17-nation region quickened in November. The single currency was close to the strongest in two weeks versus the pound after European Central Bank President Jean- Claude Trichet said that policy makers will “closely” monitor energy and commodity prices, signaling possible higher interest rates. Australia’s dollar fell toward a seven-week low against the greenback after a government report showed producer prices rose the least in a year. “Eurozone rates are higher versus the U.S. and the countries that were a cause for concern have rallied strongly,” said Tony Allen, global head of currency trading in Sydney at Australia & New Zealand Banking Group Ltd., Australia’s third- largest lender by market capitalization. “We’re in a bull move for euro.” The euro traded at $1.3605 as of 1:35 p.m. in Tokyo from $1.3621 last week in New York, after advancing to $1.3647 earlier today, the strongest since Nov. 22. The single currency was at 112.59 yen from 112.48 yen, after climbing to 112.71, the highest since Nov. 23. The euro bought 85.22 British pence from 85.13 pence, after rising to 85.31, the most since Jan. 5. The dollar was at 82.77 yen from 82.57. Industrial orders in the euro area rose 1.9 percent from the prior month, when they gained 1.4 percent, according to a Bloomberg survey before the report today. A composite index based on a survey of euro-area purchasing managers advanced to 55.6 in January from 55.5 in December, a separate survey showed before today’s data from Markit Economics. Trichet’s Rhetoric Trichet this month toughened his rhetoric on inflation after it accelerated to 2.2 percent in December, breaching the ECB’s 2 percent limit for the first time in more than two years. The change in tone prompted some economists to bring forward forecasts for rate increases and helped drive the euro more than five cents higher against the dollar since Jan. 12. “We are profoundly attached to our mandate,” Trichet said in a Wall Street Journal interview in response to a question on whether his Jan. 13 comments were over-interpreted. “Clearly, in particular on the side of energy and commodity prices we have a number of developments that we will continue to monitor closely.” Aussie Falls Australia’s currency fell against most of its major counterparts after the statistics bureau said producer prices climbed less than economists forecast. Prices paid to producers rose 0.1 percent in the fourth quarter, compared with the median forecast for a 0.5 percent gain. The statistics bureau will publish its consumer price index tomorrow. Today’s figures cover a period before floods devastated parts of northeastern Australia. “A similar low-inflation picture is likely to get repeated in consumer prices,” said Adrian Foster, Hong Kong-based head of financial-market research for Asia at Rabobank Groep NV. “I’d look for a sell-off in the Aussie toward the 97.60 cent area.” Australia’s currency dropped 0.2 percent to 98.81 U.S. cents, after declining to 98.04 cents on Jan. 12, the lowest level since Dec. 9. U.K. Growth The pound fell against the dollar, paring this month’s gain, before a government report that economists said will show U.K. economic growth slowed last quarter. Sterling has strengthened 2.2 percent this month after inflation moved further above the government’s 3 percent limit, spurring bets the Bank of England will boost rates sooner than previously thought. Gross domestic product rose 0.5 percent, compared with a 0.7 percent increase in the third quarter, according to economists in a Bloomberg survey before tomorrow’s report. “The markets are a bit premature in expecting the Bank of England to hike rates anytime in the next few months,” said Mitul Kotecha, Hong Kong-based head of global foreign-exchange strategy at Credit Agricole CIB, said in an interview with Bloomberg Television. “That might just see a little more downside risk to sterling.” To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

Source