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