The Australian dollar ended higher, closing in on parity again with the US dollar, after gaining one US cent overnight due mainly to weakness in the American currency.
At 1700 AEDT, the local unit was trading at 99.50 US cents, up almost one US cent from yesterday’s close of 98.54 cents, on renewed investor interest during the local day session.
The dollar later breached parity again, trading recently at 101 US cents.
It was also buying 74.2 euro cents, 63 pence and 82.9 yen.
Since 0700 AEDT on Tuesday, the local unit traded in a tight range between 99.43 US cents and 99.66 cents.
The Australian share market closed slightly firmer, buoyed by resources and energy stocks.
Commonwealth Bank currency strategist Richard Grace said the Australian dollar held on to overnight gains on the back of US dollar weakness.
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‘That’s been the main driver,’’ Mr Grace said.
He said the local currency had not moved a lot during domestic trade in the absence of any major data during the Asian session.
‘‘The Aussie has been stronger against all the major currencies except the euro, which has firmed against the US dollar.’’
Mr Grace said equities and commodities had been well supported during the domestic session.
‘‘It’s probably been
part and parcel of why we’re here at this point and why the Aussie’s held up,’’ he said.
Expectations that a tax cut package will pass the US Senate, and a round of corporate deals, pushed US stocks higher on Monday.
Treasury bond yields fell after briefly touching their highest levels since June.
Mr Grace said US Treasury yields and the direction of the US currency would heavily influence the Australian dollar in the offshore session.
‘‘We’ll have to see how equities and commodities go,’’ he said.
The market is waiting to hear from the US Federal Reserve meeting due to end on Wednesday morning (AEDT).
The US government is due to release inflation data on Wednesday night (AEDT) and retail sales figures on Thursday night.
At 1600 AEDT, the RBA’s trade weighted index was at 74.8 up from Monday’s close of 74.3.
AAP, with BusinessDay