/www.fxserver.com/ THE dollar gained half a US cent and pushed sharply higher against the yen as the opportunity for higher yields locally continued to drive investor interest.
At 1700 AEST the dollar was at $US0.6371/76, its highs for the day, compared with 0.6315/20 at yesterday's close.
NM Rothschild & Sons associate director foreign exchange Paul Macarounas said it was mostly a dollar/yen play on the day.
"It really has been the driving force behind those high yielding currencies," he said.
The dollar traded to 75.55 yen, a level not traded for nearly four years.
On the US dollar front the currency continued its climb and traded on the day between $US0.6340 and 0.6375.
Mr Macarounas said overnight the US dollar had weakened and that was the factor that kept the local dollar above US63 US cents.
And as Japan came back to market today after yesterday's holiday the buying continued.
He said US64c would be a natural resistance level as when the dollar was in decline the US64c-to-US66c region provided a plateau for the major sell-off that was happening during the Asian crisis in 1997.
"But when the aussie has a run on it can be overbought or oversold for many weeks before it pulls back," Mr Macarounas said.
"I think we can pause at US64c but dips will be shallow ... the aussie can get a run on when it feels like it and if this high-yield demand from Japan for uridashi, and the aussie/yen pushes up it will get to 64 cents quickly.
"I look for dips to be shallow and I don't se the aussie below 62.5 and that looks reasonable support and dips to there will be opportunities for the run to 64 or 65 cents."
CMC Group plc foreign exchange dealer Stuart Scrace said a top might be in sight.
"Most of our client with positions on the Australian dollar are long or have bought the aussie, but clients have started to set profit targets for these positions," he said.
He said the sharp uptrend combined with recent gains - the dollar is US7c above the 0.5663 level it finished 2002 - may have caused investors to become increasingly nervous about the chance of a correction.
At 1600 AEST the Reserve Bank of Australia Trade Weighted Index was at 56.9 points from 56.7 points at yesterday's close.