By Virginia Harrison, MarketWatch
SYDNEY (MarketWatch) — The Australian dollar hit a fresh 29-year high against the greenback on Thursday, with the dollar weaker against other major currencies, while traders watched Europe ahead of the outcome of the Irish banks’ stress-tests.
The dollar index (DXY 75.86, -0.26, -0.34%) , which measures the U.S. unit against a basket of major currencies, fell to 75.973, from 76.091 in late North American trading on Wednesday.
The Australian dollar (AUDUSD 1.0321, +0.0005, +0.0485%) hit $1.0346, its highest point since the currency was floated in 1983, helped by better-than-expected monthly retail trade data. Read more about Australia’s February retail sales report.
The Aussie later eased a bit to $1.0332, but still up from $1.0324 late Wednesday.
“Commodity currencies remain firmly in the ascendancy. The mixed rhetoric coming from Federal Reserve Open Market committee (FOMC) officials, and which is keeping alive the debate about whether QE2 might be curtailed following the April FOMC meeting, is doing nothing to dampen the spirits of commodity and carry trade enthusiasts,” currency strategists at BNP Paribas said in a research note Thursday.
The dollar (USDYEN 82.8100, -0.1000, -0.1206%) weakened against the yen to ¥82.77, from ¥82.87 late Wednesday, but the euro (EURYEN 117.4400, +0.2800, +0.2390%) edged slightly higher against the Japanese currency, buying ¥117.08, up from ¥117.05.
“The yen has proved able to break clear of its post-Group-of-Seven-Nation intervention highs and is rapidly becoming the carry-trade funding vehicle of choice,” the BNP strategists said.
Irish jitters
The extent of the Irish banking crisis will revealed later on Thursday with the results of the government stress tests on its banks.
Reuters has forecast the amount of additional capital needed by the ailing banking sector will be in the range of €18 billion to €23 billion ($25.5 billion to $32.6 billion).
“Given that there is a €35 billion provision for bank recapitalization within the existing European financial stability facility bailout, such news is likely to be greeted with relief, providing that the tests are seen to be reasonably transparent and credible,” BNP Paribas strategists said.
The euro (EURUSD 1.4180, +0.0050, +0.3539%) rose to $1.4149, up from $1.4128 late Wednesday.
