Aussie dollar nudges 84 cents

The Australian dollar touched a high of $US0.

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8385 overnight – a fresh high in its recent run of near 17-year highs.

In early trade today it was at $US0.8366, up from yesterday's close of 0.8320.

The Australian dollar has also hit a 10-year high against the yen, reaching ¥100.

ICAP chief economist Michael Thomas said the Australian dollar rose sharply on the back of consumer price index (CPI) results in the UK and the US.

"It was all driven by the European currencies and the different prospects for rate hikes in Europe versus the US," he said.

US CPI rose 0.6 percent in March, slightly below the rise expected by economists.

Core CPI was at 2.5 percent on an annualised basis, below expectations for 2.7 percent growth, taking pressure off interest rates.

On the other hand, annualised CPI for March in the UK reached 3.1 percent compared with expectations of 2.8 percent growth.

"There's a rule that if it goes above three percent, the Bank of England governor has to write a letter of explanation to the chancellor of the Exchequer," Mr Thomas said.

"It was a big deal, and as a result, the market is now pricing in a May rate hike in the UK."

He said a rise in investor sentiment in Germany also increased the odds of a June rise in Europe and added to demand for the Euro.

"So what we saw was heavy US dollar selling against the European currencies," Mr Thomas said.

"And we just went along for the ride."

Mr Thomas said the release of inflation figures in New Zealand this morning could have some bearing on the Australian dollar, but the next major influence would come from the domestic CPI figures on Tuesday.

Pound hits 2 dollars

The British pound topped $US2 for the first time in nearly 15 years after figures showed an unexpected surge in UK inflation, strengthening the likelihood that the Bank of England will raise interest rates while concerns about sluggish economic growth in the US linger.

The pound rose to $US2.0066, up from its level Monday of $US1.9900.

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