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THE Australian dollar jumped more than half a cent after a surge in China's trade raised hopes that Asia's powerhouse economy was recovering faster than expected.

Markets pushed the currency to its highest level in weeks on Thursday, as official figures showed Australia had benefited from a surge in shipments of commodities to its biggest trading partner in the final month of 2012.

With iron ore prices also taking off this week, analysts said the signs of Chinese strength suggested the Reserve Bank would leave the cash rate on hold at 3 per cent next month.

In a positive sign for the world's second-largest economy, the figures showed a 14.1 per cent jump in exports in the year to December, up from just 2.9 per cent in November, exceeding most analysts' forecasts.

Chinese imports were also up 6.1 per cent in the year - including a 7 per cent jump in imports from Australia - suggesting solid domestic demand.

The dollar rose more than half a cent to US105.45¢ on Thursday afternoon.

The global co-head of currency strategy at NAB, Ray Attrill, said investors had piled into the Aussie after the strong trade figures suggested China's economic growth rate had probably picked up from 7 per cent late last year.

''It's taken off like a rocket,'' he said of the currency.

''The China trade numbers have punched the lights out in relation to what economists' expectations were in all respects.''

Significantly for Australia, iron ore imports were up 10.7 per cent over the year to December.

''It seems to suggest that the Chinese growth engine has revved up towards the end of last year,'' Mr Attrill said.

While the trade numbers are the latest sign of stronger activity in China, the news on Australia's construction industry was less positive.

The number of building approvals granted for private-sector houses - which points to future activity in construction - fell 0.3 per cent in November, the Bureau of Statistics said. This occurred despite the Reserve Bank cutting the cash rate in October.

In total, residential building approvals rose by 2.9 per cent, the ABS said, although high-density housing - which covers apartments - jumped 10.1 per cent.

Commonwealth Bank economist Diana Mousina said the figures showed the housing market was experiencing a slow recovery, although it would take some time to gather momentum.

Despite lingering doubts over weakness in non-mining companies, investors pared back the odds of a February interest rate cut to 35 per cent from 42 per cent, Credit Suisse numbers showed.

Nomura's interest rate strategist in Australia, Martin Whetton, said the market was not pricing in a full 25-basis-point cut in the cash rate until April.

''It's pushed the expectations out and I think we are going to see that if the data continues to perform strongly in China,'' Mr Whetton said.

The ABS figures showed the growth in building approvals was centred around Victoria, which saw an 8.7 per cent rise during November.

All other states recorded a fall in approvals, with South Australia, down 13.9 per cent, and Tasmania, dropping 7.7 per cent, the worst performers.