The Australian dollar rose to six-week highs on Monday, fired by demand in Asia and the relentless rise in commodity prices, although the rally began to lose steam through profit-taking late in the session. The Aussie was $0.7771/75, below an intra-day high of $0.7790 and compared with $0.7720/24 late here on Friday, according to Reuters data.
"Commodities have been strong, with metals particularly good," said John Kyriakopoulos, currency strategist at National Australia Bank.
"That combined with increasing risk appetite for the currency as a carry trade are driving things today."
"I would expect near-term appreciation could continue towards 78.50 US cents, although beyond that I'd be concerned on a risk basis given probable further US rate rises and possible renewed speculation about global growth given high oil prices."
Commodities extended last week's solid performance in Asian trading with investors jumping into copper futures to drive London Metal Exchange (LME) copper beyond previous record highs touched in post-floor trading on Friday.
Reflecting gains in the LME contract, Shanghai copper futures touched their four percent daily limit while gold continued to attract both end-user and fund demand across the region.
The strength of prices led the government to raise its forecast for Australia's important commodity exports to A$116 billion ($91 billion) for the 2005/06 fiscal year, which would be a 15 percent rise on the previous year.
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