The Australian dollar has closed stronger, as risk appetite surged following positive consumer sentiment data in the US.
At the local close, the dollar was trading at $US0.7857, up almost one US cent from Tuesday's close of $US0.7765.
Nomura Australia chief economist Steven Roberts said improved risk sentiment, encouraged by positive US data during Tuesday's offshore session, had given the local unit a boost.
The US dollar came under pressure during offshore trade after a private sector survey showed consumers were much more positive in May.
The survey of US consumer confidence from the Conference Board - an industry group - rose 14.1 index points in May to an eight-month high of 54.9 points.
Moreover, it was the largest monthly increase in six years and well above market expectations of a 42.0 result.
"Basically, the dollar has been pretty well supported,'' Mr Roberts said. ``It's partly flowing from improved risk sentiment, we saw that in the way in which US equity markets improved last night.''
Wall Street powered higher when it resumed trade after the Memorial Day holiday, propelled by the consumer sentiment data.
Further positive data is expected during Wednesday's offshore session, with the US National Association of Realtors due to publish its existing home sales data for April.
Economists are expecting a 1.5 per cent rise in home sales in April, up from the three per cent fall in March.
The existing home sales series is a measurement of the residential real estate market.
"Very soft house prices could undo all the work and prospects for US recovery,'' Mr Roberts said. "But there's a reasonable chance (the Australian dollar) will pick up further.''
AAP
