By Anchalee Worrachate Feb. 15 (Bloomberg) -- The Australian and Canadian dollars strengthened on speculation China’s economic expansion may accelerate, boosting demand for commodities. The Australian dollar, also known as the Aussie, rose against all 16 of its most-traded peers after Goldman Sachs Group Inc. and Bank of America-Merrill Lynch maintained their forecasts for Chinese growth even as officials cool lending to restrain price growth. The euro traded near a nine-month low against the dollar as European Union officials prepared to meet to discuss how to shore up Greece’s finances. “The Aussie dollar is well supported by speculation that the new measures in China will have no long-lasting impact on growth,” said Geoffrey Yu, a currency strategist in London at UBS AG. “The market doesn’t seem to believe that this will result in economic slowdown in China.” The Aussie advanced 0.2 percent to 89 U.S. cents as of 11:40 a.m. in London. The Canadian dollar climbed 0.1 percent to C$1.0488. The euro dropped 0.1 percent to $1.3613, within less than a cent of its lowest level since May 2009. Economic growth in China, Australia’s biggest trading partner, may continue expanding even after the Chinese central bank raised reserve requirements for lenders on Feb. 12, Goldman and Merrill Lynch said. Goldman kept its growth forecast at 11.4 percent. Merrill held its at 10.1 percent. China’s economy grew 8.7 percent last year. Averting Bubbles The People’s Bank of China said it will raise banks’ reserve requirement ratios by 50 basis points to try to avert asset bubbles and restrain inflation. Policy makers around the world flooded the economy with money last year to spur a recovery from the first global recession since World War II. The euro traded near its lowest level since May 2009 against the dollar before a meeting of European finance ministers today that may provide details of a bailout for Greece. The U.S. currency rose against 11 of its 16 most-active counterparts as Zawya Dow Jones yesterday said Dubai World, the state-owned company seeking to restructure $22 billion of debt, may offer creditors 60 cents on the dollar after seven years. “Greece is between a rock and a hard place, and that hurts the euro,” said Neil Mellor, currency strategist at Bank of New York Mellon Corp. in London. “Those negative headlines about Greece and Dubai are generally supporting the dollar.” At an EU meeting last week, German Chancellor Angela Merkel, Greek Prime Minister George Papandreou and ECB President Jean-Claude Trichet agreed on a plan that called for closer monitoring of the Greek economy. Pressure on Euro “Markets are once again hoping for concrete details about a possible bailout of Greece,” Ulrich Leuchtmann, the head of currency strategy at Commerzbank AG in Frankfurt, wrote in an e- e-mailed note today. “We do not expect a clarification of how Greece is going to be rescued in an emergency. Uncertainty about this issue is therefore likely to continue putting pressure on the euro this week.” Dubai and Dubai World have not made an offer to creditors on the holding company’s debt restructuring, a spokeswoman for the emirate’s Department of Finance said yesterday, the same day U.K. Business Secretary Peter Mandelson said time is running out to resolve the issue. The dollar approached its strongest level against the yen in more than one week before a report tomorrow that economists said will show an increase in the Federal Reserve Bank of New York’s general economic index. The manufacturing figure climbed to 18.0 in February from 15.92 in the previous month, according to the median estimate of 43 economists surveyed by Bloomberg. Fed Rates “The Chinese economy is in good shape, and exports will be the biggest swing factor this year,” said Lu Ting, a Hong Kong- based economist for Bank of America-Merrill Lynch. “Outside of China, people underestimate the government’s ability to manage the economy and the stimulus exit.” Fed Chairman Ben S. Bernanke said last week the central bank may raise the discount rate “before long” as economic stimulus measures are unwound. Futures trading in Chicago last week showed a 49 percent chance that the Fed will raise its target lending rate by at least a quarter-percentage point by its September meeting, up from 43 percent a week ago. The yen also fell after a Cabinet Office report today showed Japan’s gross domestic product deflator dropped 3 percent in the fourth quarter from a year earlier. The deflator is used to calculate economic growth adjusted for price changes. Japan’s economy expanded at an annual pace of 4.6 percent in the fourth quarter.

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