Aussie dlr scales 29yr peak vs dlr, ral­lies against yen

The Financial Daily - - MONEY & FOREX -

SYD­NEY/WELLING­TON: The Aus­tralian dol­lar scaled a 29-year peak against the green­back on Wed­nes­day, and raced to 10-month highs against a broadly weaker yen as risk sen­ti­ment stayed re­silient with re­gional eq­ui­ties mak­ing solid gains.

The yen has come un­der broad pres­sure af­ter hawk­ish com­ments by Fed­eral Re­serve and Euro­pean Cen­tral Bank of­fi­cials con­trasted with the stance taken by the Bank of Ja­pan, which is set to leave in­ter­est rates near zero for some time to sup­port a re­cov­ery from the March 11 earth­quake.

"Ja­panese in­vestors are eyeing (bet­ter) yields off­shore, whether it be in Aus­tralia or Amer­ica or else­where, and that is what's push­ing the yen down on a broad front," said Joseph Ca­purso, strate­gist at Com­mon­wealth Bank. With the of­fi­cial cash rate at 4.75 per cent, Aus­tralia has some of the most at­trac­tive yields among de­vel­oped na­tions.

Fur­ther sup­port­ing the Aussie was per­sis­tent talk of M&A flows, solid de­mand for higher-yield­ing cur­ren­cies and lofty com­mod­ity prices, traders said.

The Aussie rose as high as $1.0334 af­ter stops were trig­gered when it breached the pre­vi­ous peak around $1.0315. It last traded at $1.0324.

It has gained about 6 cents in just un­der two weeks, reach­ing the high­est lev­els since it was floated in 1983. Against the yen, the Aussie jumped to a 10-month high of 85.69 yen, a re­mark­able 14 per cent turn­around from a low of 75.05 just two weeks ago. The break of the 200-week mov­ing av­er­age at 84.17 was also seen bullish for fur­ther gains to­ward the 2010 highs around 88.00.

Track­ing the Aussie, the New Zealand dol­lar hit a five-week high of $0.7583, well up from $0.7514 in Tues­day's late lo­cal trade.

Mike Jones, a strate­gist of Bank of New Zealand, said he ex­pected some re­sis­tance around the cur­rent level, with heav­ier sell­ing in­ter­est seen near $0.7640. The kiwi has gained more than 2 per cent in the past week, even as the lat­est slump in build­ing ap­provals data pointed to a hit to the econ­omy in the first quar­ter. The Aussie slightly out­per­formed its New Zealand coun­ter­part, edg­ing up to NZ$1.3600 from around NZ$1.3574. -Reuters

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