The Australian dollar closed higher for the 10th consecutive local session on Tuesday as financial markets respond favourably to the US government's plan to remove bad debts from the books of American banks.
At the local close, the Australian dollar was trading at $US0.7074, up 1.5% from Monday's close of $US0.6966.
It was the local currency's highest closing level since January 9, when it ended the local session at $US0.7081.
the dollar was also trading at 69.52 yen, after 67.02 yesterday, and at 0.5176 Euro from 0.5101 Euro.
The US government's plan to clear toxic assets from banks' balance sheets in a bid to restart lending by banks had investors buying higher-yielding assets.
Westpac senior currency strategist Sean Callow said the Australian dollar built gains on the improved sentiment on financial markets following the release of the US government's plan for banks.
Mr Callow said equity markets in Asia were more restrained in their view of the toxic assets plan, which stemmed the rise in the Australian dollar.
The Australian S&P/ASX200 index added 0.8%, while the broader All Ordinaries gained 1%.
"The Australian dollar has been very impressive,'' Mr Callow said. "It has run out of a bit of steam just ahead of 71 (US) cents, which probably reflects Asian equity markets being not as ebullient as the US lead.
"They are making decent gains, but they are not as exactly euphoric as what they saw last night.''
The local currency has benefited from an improvement in global equities market and a weaker American dollar, which was hit last week following the US Federal Reserve's decision to buy US bonds.
"It feeds into the fact that it is less than a week since the Fed came out with a policy stance that many people took as being very negative for the (US) dollar,'' he said.
"There is also a more positive view on global growth and very importantly, a great deal of pessimism over currencies whose central banks are either engaged in quantitative easing or they plan to.
"Australia is none of those.''
With no major economic data due for release in the US, Mr Callow forecasts the Australian dollar to trade between $US0.7025 to $US0.7140 with the test at the upper end of the range.
AAP
