Low Yen Bolsters Commodity Currencies


NEW YORK ( TheStreet) -- The global, coordinated selloff of the Japanese yen bolstered commodity currencies in U.S. trading Tuesday.

One of the primary beneficiaries of the yen suppression Tuesday was the Australian dollar -- via the carry trade. The Australian dollar was 1.2% stronger at 84.615 yen and 0.2% firmer at $1.02666. CurrencyShares Australian Dollar Trust ( FXA) was up 0.1% to $103.

"The carry trade is back, and pushing the Australian dollar back into record territory. With the G7 intervening to keep the Japanese yen down, the carry trade is pretty much a 'no brainer'," EverBank World Markets Vice President Chris Gaffney said. In carry trades, investors fund the buying of higher yielding currencies such as the Australian dollar after borrowing and selling lower yielding currencies such as the yen.

The carry trade has helped the Australian dollar hit a fresh high against the U.S. dollar recently and the New Zealand dollar shrug off losses. Other drivers have included expectations of more retail sales growth in Australia and New Zealand's first reported trade surplus in eight months in February as commodities achieved record high prices.

The New Zealand dollar was rising 1.6% at 62.29 yen and 0.7% at $0.75597. WisdomTree Dreyfus NZ Dollar Fund ( BNZ) was adding 0.5% to $23.08.

If you liked this article you might like

'Fast Money' Recap: Consider Airline and Bank Stocks, Avoid Twitter

Loomis Long U.S. Dollar, Sees Limited Opportunities in Eurozone Bonds

'Fast Money' Recap: Broader Market a Buy if Oil Prices Rebound

'Fast Money' Recap: Buy Bank Stocks if They Fall on Senate Commodities Report

'Fast Money' Recap: Will Housing Stocks Rally Into Year's End?