The Australian dollar was at 10-year highs against the dollar at midday after buoyant consumption and housing data raised expectations that the Reserve Bank of Australia may raise borrowing costs tomorrow. Most RBA watchers think the central bank will decide to keep its key cash rate unchanged at 6.25 pct but stressed that today's news that retail sales rose a seasonally adjusted 0.9 pct in February from January and building approvals surged a monthly 10.6 pct have made it a much closer call. "For choice the RBA will most likely prefer to wait until they have seen the first quarter CPI data released later this month, although a number of indicators suggest that the policy tightening pursued thus far has not had major impact, so a further immediate rate hike could easily be rationalised," said Ian Gunner, head of research at Mellon Foreign Exchange. Elsewhere the pound was higher at midday after a weaker-than expected manufacturing purchasing managers index was offset by strong mortgage equity withdrawal figures. The data maintained expectations the Bank of England will raise interest rates to 5.25 pct at its meeting in May or possibly as soon as this week when it meets on Thursday. The Chartered Institute of Purchasing and Supply's purchasing managers index fell to 54.4 in March from 55.4 in February, analysts polled by AFX News had predicted a much more moderate fall to 55.0. "On the PMI, it appears that there was some payback after very strong February figures - the headline PMI had been at its highest level since May 2004," said Alan Castle, UK economist at Lehman Brothers. However, Bank of England figures showed mortgage equity withdrawal (MEW) in the UK rose to 14.6 bln stg in the fourth quarter of 2006 from 12.2 bln stg in the third quarter.