IT could be the perfect time to book that holiday to Europe, with the Australian dollar hitting an all-time high against the euro.

The dollar hit 0.8456 euro cents this afternoon – the highest since the European currency began trading in 1999.

For roughly $3000 today you’ll bank $2537 euro, compared to just $1440 in December 2008.

Western Union senior currency dealer David Greene said reasons for the jump included doubts raised by German Chancellor Angela Merkel about the stability of the eurozone.

[quote]“Traders react and people begin to think the eurozone is going to implode if not even the German Chancellor knows the solution to the eurozone crisis,” Mr Greene said.[/quote]

He said the strength of the Australian economy compared to Europe was another reason for the high dollar.

“We’re politically strong…Aussie bonds are the flavour of the month…the RBA is not looking to cut rates any time soon and we have a higher interest yield compared to the rest of the world.”

Whether the Aussie dollar’s rise against the euro will continue is anybody’s guess but it has never been cheaper to buy European goods or travel overseas as it is today.

Mr Greene said the dollar might head for the 0.85 euro cents mark as the market tends to psychologically go for a round number.

Ozforex senior foreign exchange manager Jim Vrondas said the Reserve Bank elected to keep the cash rate steady at its meeting on July 3 and he believes this may have influenced both bond and currency market trends.

[quote]”The bond yield advantage that the Aussie has held in Europe has firmed and widened recently,” Mr Vrondas said.[/quote]

“This is because the RBA is on hold now, and the ECB (European Central Bank) cut rates recently – so that’s another reason why the cross rate is well supported.

“The other reason is an investor move into the Aussie dollar and the Australian bond market as well.”

[quote]The trend would be likely to continue unless there was some more optimistic news from the eurozone, he said.[/quote]