Dollar opens at fresh 1-year high on commodity boost

The Australian dollar opened at a fresh one-year high today after a bullish night of gold and oil trading boosted the commodity sensitive currency.

At 7am, the Australian dollar was trading at 86.17 US cents, up from yesterday's close of 85.91 US cents. It was also buying 79.55 yen, 59.52 euro cents and 52.27 pence.

It was the Australian dollar's highest open to the local session since August 26, 2008, when it started at 86.28 US cents.

During offshore trade, the local unit moved between 85.44 and 86.58 US cents.

"I don't think it was any one thing. The US dollar was weak across the board," said Tim Kelleher, vice president of institutional banking and markets at Commonwealth Bank.

"The Aussie has had such a big move its brought the US dollar index lower.

"Gold was up overnight which added to Aussie bullishness and oil did very well as well."

As a commodity or risk sensitive currency, the Australian dollar rises and falls with the price of resources like gold and oil.

The price of gold rose above $US1000 an ounce here yesterday, reaching the highest level for 18 months, as a weaker US dollar fuelled demand for the metal, dealers said.

Gold hit $US1007.70 an ounce on the London Bullion Market, the highest level since March 2008 when the metal had hit a record high of $US1032.70.

Gold last broke through $1000 in February before falling back.

Meanwhile, Crude prices settled above $US71 a barrel at the end of Tuesday's offshore trade.

Benchmark crude for October delivery gained $US3.08 to settle at $US71.10 a barrel on the New York Mercantile Exchange.

Mr Kelleher said investors were also spooked following calls for a new global currency by the UN Conference on Trade and Development (UNCTAD).

The report, carried in Monday's on-line edition Britain's Telegraph newspaper, centred on changing the currency and capital rules that bind the world economy.

The article said the report called for the current system, under which the US dollar acts as the world's reserve currency, to be subject to wholesale reconsideration.

In economic news today, the Australian Bureau of Statistics housing finance data for July and ABS retail trade data for July is due out.

The Westpac/Melbourne Institute Survey of Consumer Sentiment is also due to be released.

During the domestic session, Mr Kelleher said the unit would range trade around 86.3 US cents.

Source: watoday.com