Click to play video After punching through the 106 US-cent mark yesterday the Australian dollar barely stopped for breath on its way past 107 US cents early today - and kept going. By 1pm, it had begun eyeing off 108 US cents.
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But in recent trade, the dollar pushed through 107.50 US cents to hit 107.72 US cents about 12.25pm, according to Bloomberg data, after the latest production inflation figures came out higher than expected.
Market watchers were left considering whether the Aussie could touch 108 US cents later today, a level not seen since January 1982, almost a full two years before the dollar was floated.
Producer prices rose 1.2 per cent in the March quarter from the previous three months, compared with the 1 per cent pace expected. From a year earlier, prices were up 2.9 per cent versus the 2.7 per cent tipped by economists.
Record run
The latest high continues a record-breaking run for the unit as investors dump the greenback on worries about debt levels in the US.
Those concerns, though, did not stop money from flooding into stock markets with Wall Street and other major markets posting some of their best gains of the year overnight. The Australian sharemarket has followed suit, building on yesterday's 1.4 per cent gain, to advance almost another 1 per cent in early trading.
Rochford Capital managing director Thomas Averill said the dollar could trade at 110 US cents over the next couple of months.
"It’s not just increased risk appetite, it’s a general aversion to holding US dollars at the moment which looks set to continue in the medium term," he said.
Traders would need to see higher US Federal Reserve interest rates in order to send the Aussie lower, Mr Averill said.
Also, the Fed’s quantitative easing program designed to spur economic growth in the US by pumping cash into the economy - which has weakened the US dollar in recent months - is set to end in June.
Commodities jump
GFT director of currency research Kathy Lien said the US dollar was being savaged and, as a result, commodities - which typically are priced in US dollars - and high-yielding currencies such as the Aussie dollar had benefited significantly.
"Weak US growth combined with the Federal Reserve's relaxed attitude towards monetary tightening kept interest rate differentials in favour of the euro, Aussie and other currencies," she said.
"Cap that off with the credit quality concerns raised by Standard & Poor's and there is very little reason for investors to hold, let alone buy, US dollars," Ms Lien said.
The Aussie was also stronger against the yen, up about 1.2 per cent to 88.060, and was up almost 1 per cent against the British pound, buying 65.2 pence.
Australia continues to benefit from its relatively large dependence on the fast-growing economies in Asia. Those countries' appetite for iron ore, copper, coal and other raw materials has helped push up the value of the Australian dollar.
"Economies globally seem to be recovering in a sustainable way," said Marito Ueda, senior managing director in Tokyo at FX Prime, a foreign-exchange margin company.
"Sentiment may be 'risk on', so high-yielding currencies [such as the Aussie dollar] could be bought."
Australia's export price index climbed 5.2 per cent in the three months through March, the Bureau of Statistics said in Sydney. Economists surveyed by Bloomberg estimated a 5 per cent increase. Import prices rose 1.4 per cent.
The MSCI World Index of stocks climbed 1.9 per cent overnight and the Thomson Reuters/Jefferies CRB Index of raw materials increased 1.3 per cent.
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