Australian dollar below fresh 18-year high

The Australian dollar eased from a fresh 18-year high on Monday, briefly dipping below 85 US cents on modest profit-taking before regaining most lost ground on expectations of strong May retail sales data this week.
The local currency and the kiwi, which rose to a 22-year high, gained from demand for high-yielding currencies as investors continued to shrug off a bout of risk aversion last week over concerns about the US subprime mortgage market.
"Being Scottish I always tend to look for dark clouds on the horizon, but it is hard to see any at the moment," said Robert Rennie, chief currency strategist at Westpac Banking Corp. The Aussie dollar was quoted at $0.8530/35, compared with $0.8486/89 here late on Friday, according to Reuters data. It hit a peak of $0.8538.
"The appetite of foreign investors for high-yielding currencies, like the Aussie and kiwi, is still intact," said Jim Vrondas, corporate business manager at online currency provider OzForex, in which Macquarie Bank has bought a 51 percent stake. Without the meltdown in investor risk-appetite that some had feared and with Japanese interest rates set to remain low, solid demand was expected for the Aussie dollar on dips, said John Kyriakopoulos, currency strategist at nabCapital. "We don't expect Japanese investment trust demand for the Aussie to dry up after the June bonuses paid to Japanese workers prompted a step up in the number of new funds launched," he said. Japan's bonus period was expected to provide the Aussie with added support until the end of this week, said Westpac's Rennie. The Aussie has risen as much as 4.6 percent in the past five weeks and as much as 8.2 percent since the start of this year. "It's conceivable to see the Aussie up around $0.8650 by the end of the week," St George Bank head of foreign exchange Glen Whittingslow said. "It looks pretty strong. I've been looking for a reason to sell it and I'm running out of reasons to sell it."
Investors expect the Reserve Bank of Australia (RBA) to keep rates steady at 6.25 percent for the eighth consecutive month at its meeting on Tuesday. It announces its decision on Wednesday.