The yen continued to strengthen this morning at the expense of high yielding currencies such as Australian and New Zealand dollars as well as the US dollar.

The Australian dollar has been dragged down by the New Zealand dollar. Both currencies may well go through several months of under-performance.

Looking back, it is understandable why the Australian and New Zealand currencies peaked in early 2005. That was about the same time that the demand for crude oil also started to moderate.

Everybody knows they (investors) want to buy high yielding currencies and the yen still seems like the best currency to sell to fund that.

The Australian dollar is being marked down by association with the New Zealand dollar.

The Australian dollar has moved up against all other currencies quite sharply. The market has been wrong-footed by the Australian dollar, as has happened on several occasions this year. You get a few strong numbers in Australia and the market has to turn around again.