Strengthening risk appetite raises demand for the higher-yeilding aussie

Sterling lost half a cent (0.3%) to the aussie yesterday, as a weak dollar encouraged investors into higher-yielding assets.

• The aussie made gains, buoyed by a weak dollar and a return to risk activity, and also taking support from the huge rally in its neighbouring commodity-driven currency, the kiwi.
  
• Also contributing to risk appetite and the broad dollar sell-off was an encouraging sign of a strengthening global economy, with the Asian Development Bank overnight declaring some Asian economies - including China and South Korea - are growing faster than previously forecast.
  
• Additionally, investors turned to higher-yielding currencies as most global stocks moved higher, triggering a new wave of risk-taking.
  
• In trading this morning, the Australian currency has continued to climb, again supported by kiwi strength, though at a much diminished rate, as investors await the minutes from the latest MPC meeting.