Australian dollar hits new 29-yr high

Reuters

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 $US1.0334 after stops were triggered when it breached the previous peak around $US1.0315. It last traded at $US1.0324.

It has gained about 6 cents in just under two weeks, reaching the highest levels since it was floated in 1983.

"We remain bullish on the AUD over the short-to medium term and suggest buying on dips for a move towards 1.04," analysts at BNP Paribas said in a client note.

Against the yen, the Aussie jumped to a 10-month high of ¥85.69, 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.