Australian dollar closes stronger

THE dollar finished close to half a US cent stronger, approaching its recent post float high, on a healthy local equity market and record high gold prices.

THE dollar finished close to half a US cent stronger, approaching its recent post float high, on a healthy local equity market and record high gold prices.

At 5pm (AEDT) today, the local unit was trading at 103.77 US cents, up from yesterday's local close of 103.37 US cents. It reached 104.22 cents on April 4, the highest since being floated in 1983.

Since 7am (AEDT), the local currency traded between 103.16 US cents and 103.79 US cents.

CMC Markets foreign exchange dealer Tim Waterer said the dollar had shown some signs of fragility over the last 24 hours.

"The trade balance came out negative yesterday, the Chinese rate hike (overnight) and then of course we had the euro and the sterling both stealing some of the Aussie's thunder in the overnight session," Mr Waterer said.

"That sort of took the Australian dollar out of the limelight and saw it dip below 103 US cents."

The local unit found some more buying support in the afternoon session today, as the domestic stock market shrugged off some initial weakness, he said.

"We've also seen gold track a little bit higher again and hitting another record high during our session as well lending some more support to a commodity linked Australian dollar."

Tomorrow, the Australian Bureau of Statistics (ABS) is due to release labour force data for the month of February.

The unemployment rate is forecast to remain at 5.0 per cent and employment growth is expected to recover with 20,000 jobs added in the month, after 10,100 jobs were lost in February.

Mr Waterer said this will be key measure which the market will be focused on.

"It's going to provide a lot of direction in terms of whether we'll be heading towards 104.50 US cents, or whether we're going to see it pulled back to 102.20 US cents."

During the overnight session, Mr Waterer expected the dollar to ride the general global market sentiment.

"If we're seeing the S&P 500 advance, I think it's fair to say that the Aussie will push towards that 104 US cent level."

The Reserve Bank of Australia's trade weighted index was at 76.5, up from 76.3 yesterday.