Australia's dollar rose to the strongest level against its U.S. counterpart since it was freely floated in 1983 and strengthened to a 10-month high versus the yen on prospects global growth will spur demand for commodities.

New Zealand's currency, nicknamed the kiwi, advanced to a five-week high versus the greenback before reports this week forecast to show Chinese manufacturing expanded at a quicker pace. China is New Zealand's second-biggest export market and Australia's largest trading partner. Both South Pacific currencies climbed against the yen as global stocks rose amid increased demand for higher-yielding assets.

"You've got the risk of global economic growth left, right and center toward the end of this year, and Aussie is bid on that," said Kurt Magnus, executive director of currency sales in Sydney at Nomura Holdings Inc., Japan's biggest brokerage. "It's all about inflation and commodities."

Eoin Treacy's view The Yen carry trade was the funding conduit of choice for leveraged traders prior to the financial crisis. For it to be profitable, traders needed to be able to borrow Yen at a low rate and reinvest that capital in a higher yielding or better performing asset. Right now, Japanese and US interest rates remain close to zero. The advent of multi lateral intervention has increased the supply of Yen and the currency's nascent downtrend could be described as state sponsored. There are a host of potential avenues in which to invest on a leveraged basis.

The Asian Dollar Index, where the Korean Won and Singapore Dollar are two of the stronger currencies, has been consolidating in the region of the 2008 peak for the last few months. It broke upwards to new recovery highs last week and a sustained move below 115 would be required to question potential for additional upside.

The Latin American Dollar Index, which is heavily weighed by the Brazilian Real and Mexican Peso also hit a new recovery high today. A sustained move below 113 would be required to question medium-term upside potential.

The Australian Dollar is rallying impressively against both the Yen and the US Dollar, having found at least near-term support three weeks ago. The New Zealand Dollar is also rallying against both the Yen and the US Dollar. Both of these currencies were favoured destinations for carry trades prior to the financial crisis, not least because of the attractive interest rate differentials on offer.

If demand for the above currencies continues to improve, it could have a knock-on effect in terms of demand for their respective stock markets.