The Australian dollar flirted with 14-1/2-month highs on Tuesday against an ailing US dollar, helped by buoyant local business confidence and firm regional stock markets. The Aussie was strong at $0.9258, up from Monday's $0.9244. One dealer said it faced some resistance at around $0.9320, with day traders selling near that level.
Still, the Aussie is within sight of a 14-1/2-month high of $0.9330 struck on October 21. The dealer said hedge funds and model funds were still dominant buyers of the Aussie despite its 33 percent rise this year, which made it the best performer among most-traded currencies.
Chief among reasons for its stellar rise are investors' bets the Reserve Bank of Australia (RBA) would raise interest rates to over 5 percent in the next 12 months, regardless of whether it tightens in December. "Whether or not the RBA hikes in December is now a moot point," Societe Generale said in a note to clients on Tuesday, given the market had already priced in a string of hikes. Against the yen, the Aussie edged up to 83.24, from Monday's 83.27 yen. Stock markets rose across Asia on Tuesday after US stocks hit a 13-month high.