The Australian dollar closed marginally higher on Thursday after a boost from a better-than-expected global economic outlook.
At the local close, the dollar was trading at 79.95 US cents, up from Wednesday's close of 79.86 US cents.
The local currency stayed in a tight range around 79.90 US cent for most of Thursday's Asian session.
Commonwealth Bank currency strategist Joseph Capurso said the Australian dollar benefited from weaker US and Japanese currencies.
The Australian dollar closed at 77.08 Japanese yen, up 1.27 per cent from Wednesday's close of 76.11 yen.
"The Aussie was broadly higher against the yen today,'' Mr Capurso said. "The US dollar did weaken a little bit against the majors but not much.''
On Wednesday, the International Monetary Fund upgraded its growth forecasts for Australia to a contraction of 0.5 per cent in 2009, before growing by 1.5 per cent in 2010.
This compared with a previous forecast of a 1.4 per cent contraction this year and 0.6 per cent growth in 2010.
Mr Capurso said the report was a boon for the currency.
Meanwhile, the local bond market closed weaker as investors abandoned fixed-income securities in disappointment about the outcome of the US Federal Reserve's monetary policy meeting.
The yield on the Commonwealth Government March 2019 bond was 5.688 per cent, up from Wednesday's close of 5.613 per cent, while the yield on the April 2012 bond was at 4.723 per cent, up from 4.568 per cent.
On the Sydney Futures Exchange, the September 10-year bond futures contract price was 94.325, down from Wednesday's close of 94.395, while the September three-year bond futures contract was at 95.090, down from 95.230.
The Australian bond market sold off after the US Federal Open Market Committee (FOMC) said it would keep the US federal funds rate unchanged in a target range between zero and 0.25 per cent for an extended period.
The commitment to keep official interest rates low failed to support the bond market, with the selloff most pronounced at the short end of the yield curve.
Westpac senior market strategist Damien McColough said the FOMC statement was "not dovish enough'' for some market participants, a reaction he found surprising.
"There was certainly absolutely nothing in there for those who think that there is going to be near-term tightening to get excited about,'' Mr McColough said. "There is a general malaise or a general fear in the market. Too many people have been burned buying Australian bonds on the way down.''
The 90-day bank bill rate closed at 3.250 per cent, which was where it finished on Wednesday's, while the 180-day bank bill rate was at 3.332 per cent, up from 3.310 per cent.
AAP
