The Australian dollar rose nearly 1 US cent today after risk sentiment rose on equity market gains and a positive economic outlook from the governor of the Reserve Bank of Australia (RBA).
At the local close, the dollar was trading at $US0.8427, up from Thursday's close of $US0.8384.
UBS economist Matthew Johnson said increased risk appetite maintained the unit's momentum during Friday's session.
"Stevens' comments today and background strength in equities was a big help,'' Mr Johnson said. "If equity markets continue to improve, the Australian dollar will trend up.''
In a wide-ranging testimony before the House of Representatives economics committee in Sydney, Mr Stevens said the central bank would adjust the cash interest rate from its "exceptionally'' low level when the time was right.
Mr Stevens noted that debt futures markets were currently pricing in a rate rise by the end of 2009. He did not "want to give any particular steer on timing'', saying the bank will adjust monetary policy "in a timely fashion, when the time is right.''
Mr Stevens also said the current rate level of 3 per cent was an emergency setting and that the RBA would tighten once the crisis has passed.
Mr Johnson, who normally chooses not to make predictions about the direction of the dollar, said it could break the $US0.8500 mark during Friday's offshore trade, should US equity markets perform well.
AAP