The Australian dollar reached the highest since the currency was freely floated in 1983 as US data spurred speculation global growth is gathering momentum, boosting demand for currencies with higher-yielding assets.

The Aussie traded above parity with the US dollar for an eighth-straight day after copper prices climbed to record levels, boosting export prospects for the resource-rich nation. Data out next week may show US manufacturing grew at the fastest pace in seven months.

“Data we’ve got out of the US has improved,” said Robert Rennie, chief currency strategist in Sydney at Westpac. “I think we finish 2010 on an upbeat note from a global economic point of view. That’s supportive of commodity prices and currencies like the Aussie and (New Zealand’s) kiwi.”

Australia’s currency reached $102.39 US cents in late-morningg trade in New York, the highest since July 1982, before easing to 101.7 US cents. It was also buying 76 euro cents, 83 yen and 65 pence.



The nation stopped pegging its currency to a trade-weighted basket of currencies in December 1983.

The Aussie had a 14 per cent gain this year against its US counterpart, the second-best performer after the yen. Westpac’s Rennie forecast the Aussie to stay above the parity level for at least the first half of 2011 before markets start to price in changes in US monetary policy.

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US data



The US currency weakened after economic reports yesterday showed business expansion, fewer jobless claims and more pending home sales. The data signaled the world’s largest economy is accelerating into the new year, encouraging demand for currencies in nations with higher-yielding assets.

The London Metal Exchange Index of six metals including copper and aluminum gained 0.7 per cent yesterday to the highest level since April 2008. Copper futures for March delivery rose to an all-time high on the Comex in New York.



Australia’s dollar has gained 11.7 per cent in 2010 in a measure of the currencies of 10 developed nations, according to Bloomberg Correlation-Weighted Currency Indexes. The US dollar declined 3.5 per cent, extending a 10 per cent slide in 2009, while New Zealand’s dollar was up 4.8 per cent.

Benchmark interest rates are 4.75 per cent in Australia and 3 per cent in New Zealand, compared with as low as zero in the US and Japan, attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits.



Bloomberg News