With the raft of stronger-than-expected data in recent months, investors are apparently betting that the Reserve Bank of Australia (RBA) is poised to hike rates this year. Indeed, according to data from the US Commodity Futures Trading Commission, currency traders are net long the Australian dollar for the first time since May 2013.

That was the month when the currency’s long-awaited depreciation finally began in earnest. Since then, the aussie has fallen as low as USD0.8683, a sharp drop from last year’s high of USD1.06. However, the currency has ascended from its late-January low and currently trades near USD0.9372.

At current levels, the RBA says the aussie remains high by historical standards, and that while the overall decline in the exchange rate should still boost the economy, this effect would be dampened by recent appreciation.

And as the newly released minutes from the RBA’s monetary policy meeting earlier this month indicate, the central bank is in no hurry to raise rates anytime soon.

The bank reiterated its recent statement that current monetary policy is appropriate for fostering sustainable demand growth while keeping inflation within its mandated 2 percent to 3 percent target range. And it said that based on present data, the most prudent course continues to be “a period of stability in interest rates.”

In an effort to further quash speculation over an imminent rate hike, the RBA also said that its benchmark cash rate could remain at its current level for some time. Westpac’s economists believe the RBA won’t be able to raise short-term rates until the second half of 2015, at the earliest.

This extraordinary level of accommodation is necessary to support the economy’s nascent rebound from last year’s trough. Although economists forecast Australia’s gross domestic product (GDP) will grow 2.8 percent this year, a significant four-tenths of a percentage point better than last year’s performance, the economy still faces a host of challenges.

As the RBA notes, China’s slowdown remains a key concern. The Middle Kingdom’s policymakers have targeted annual growth of 7.5 percent, a positively torrid pace compared to the developed world, but a substantial deceleration from the double-digit growth it routinely posted during much of the last decade.

China is Australia’s largest trading partner and a major export destination for the country’s commodities, particularly iron. While China’s economy grew at its slowest pace in more than 18 months during the first quarter, up 7.4 percent from a year ago, it actually performed slightly better than economists had expected.

Australia also faces major headwinds from a decline in mining investment as well as weak public demand. Labor demand also remains weak, despite recent employment gains, though a range of indicators suggest modest improvement in the months ahead, particularly in the service industries.

Fortunately, moderate wage growth should continue to support consumer demand and offset inflationary pressures from a depreciating currency.

But there are promising areas among non-mining sectors, including rising retail sales, strong exports, and, given the low interest rate environment, substantial investment in real estate.

Housing prices rose 10.5 percent year over year in March, and the RBA says the high level of dwelling approvals in recent months foreshadows a strong expansion in dwelling investment.

Meanwhile, non-residential building approvals increased in January and, in trend terms, were at their highest level since 2008. The RBA says increases were evident across a range of categories, including the office, industrial and “other commercial” sectors. This suggests that while business sentiment shows reluctance to commit to major investments, that’s belied by what they’re actually doing.

Overall, the central bank has a constructive outlook toward the economy and will continue to do what is necessary to support future growth.

Portfolio Update

This week, Australia’s government made an announcement that could present Sydney Airport (ASX: SYD, OTC: SYDDF) with a significant growth opportunity or perhaps an upstart competitor.

On Tuesday, Prime Minister Tony Abbott’s government approved a one-runway airport at Badgerys Creek, which is about 50 kilometers west of Sydney’s central business district. As part of the company’s deal with the government when Sydney’s sole airport was privatized in 2002, Sydney Airport has the first right of refusal to build and operate the second airport, which means the company will likely spend the next one to two years negotiating the terms with the government.

Analysts expect Sydney Airport will exercise its right to take up the project, assuming the two entities can agree on suitable terms. The government says the private sector must assume the cost of building the airport, which it projects will come in at around AUD2.5 billion.

A second airport was first proposed more than 50 years ago, but has been hamstrung by political squabbling ever since. During last year’s protracted election cycle, however, Mr. Abbott had vowed to pursue major infrastructure projects that could help spur economic growth as investment in the country’s resource sector wanes.

In addition to private-sector spending to build the airport, the government has also pledged AUD2.9 billion in new roads spending over the next eight years, with the intent of expanding or upgrading several major thoroughfares that would eventually feed into the airport.

There are also plans to secure a rail corridor, though spending plans in this area have yet to be announced. And the government has said a rail link is not essential for the airport’s operation, so this aspect of the project’s supporting infrastructure could be tabled until a later juncture.

In the near term, the government says the project will create 4,000 road-construction jobs and anticipates the gain of another 60,000 jobs over time as additional development occurs in the surrounding area.

Construction on the airport itself is slated to begin in 2016, with operations commencing around the middle of the next decade.

Although airport operators caution there could be difficulties convincing airlines to fly into the new airport during its first few years, a second airport could provide the company with a long-term growth opportunity, since western Sydney’s population is expected to rise by 50 percent over the next 20 years, to 3 million from 2 million.

One incentive for airlines to fly in and out of the new airport is the lack of a curfew. By contrast, Sydney Airport’s Kingsford Smith has a nighttime curfew that runs from 11:00 p.m. through 6:00 a.m. Of course, this incentive will likely face entrenched opposition from local politicians concerned about noise and pollution.

Additionally, the airport’s location, which is about 40 kilometers further from the city center than the prime location occupied by Kingsford Smith, means that it could become a major hub for growth-oriented budget airlines.

As for its intentions with regard to this project, Sydney Airport remains noncommittal, stating it would “continue to engage in constructive discussions” with the Abbott government.

Still, it seems unlikely that they’ll pass on the opportunity. As Michael McCarthy, chief market strategist at CMC Markets, observed, “I don’t see how [Sydney Airport] could avoid [working with the government]. They operate under government auspices anyway, and taking an antagonistic or competitive approach, I think would ultimately work against them.”

Sydney Airport’s stock has dropped 2.6 percent over the past few trading sessions, perhaps out of concern that a second airport could undercut growth at Kingsford Smith, if the project is ultimately taken up by a competitor. However, Deutsche Bank notes that London’s Heathrow Airport managed to sustain passenger growth despite the opening of two other smaller airports at Gatwick and Stansted.

Sydney Airport’s mix of analyst sentiment is weighted toward neutral with a moderately bullish tilt, at six “buys,” eight “holds,” and two “sells.” The consensus 12-month target price is AUD4.24, which suggests potential appreciation of 3.7 percent above the current share price.

For full-year 2014, analysts forecast revenue will grow 6 percent, to AUD1.18 billion, while adjusted earnings per share are expected to come in at AUD0.08 compared to AUD0.01 last year.

On a price basis, Sydney Airport’s stock has gained 22.5 percent over the trailing year versus a 9.5 percent return for the S&P/ASX 200.

With a current yield of 5.5 percent, Sydney Airport is a buy below USD4 in the Aggressive Portfolio.