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Dollar extends gains against yen


The Australian dollar tore to a fresh four-year peak on the yen today and held gains on the greenback, as investors took comfort from improving global economic prospects.

The dollar flew to 95.37 yen, its strongest since August 2008, having cracked key resistance at 95 yen. The advance on the yen was attributed to buying from Japanese buyers and models funds.

The dollar has now gained more than 17 per cent each since November on the belief that true reflation in Japan would require a much weaker yen.

Against the greenback, the Aussie held firm as rising equities helped sentiment toward risk assets and commodities.

The dollar fetched $US1.0472, from $US1.0435 in late local trade on Tuesday, well above a low of $US1.0384 hit early in the week.

The dollar was unmoved after Australian Prime Minister Julia Gillard called a national election in September. The timing of the poll is much as expected but announcing it so far ahead was a surprise.

Markets were now awaiting US GDP figures later in the day which are expected to show a marked slowing in the last quarter.

The Federal Reserve announces the outcome of its first policy meeting of the year overnight. It is widely expected to reaffirm its commitment to a super-easy policy until unemployment falls sharply, which could ease concerns about an early end to bond buying.

Australian government bonds futures slipped with the 10-year contract plumbing 96.495, its lowest since May. A break of 96.488, the 50 percent retracement of last year's March-May climb would see it test 96.272, its weakest since April.


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