Dollar higher as Greek fears temporarily ease

THE dollar was higher today, recovering losses from yesterday sparked by deepening fear over Greek debt.

THE dollar was higher today, recovering losses from yesterday sparked by deepening fear over Greek debt.

At 7am (AEST) today, the Australian dollar was trading at 105.31 US cents, up almost three quarters of a US cent higher from 104.69 cents on Wednesday.

Since 5pm (AEST) today, the local unit traded between 104.63 US cents and 105.51 cents.

Yesterday, the Australian dollar fell heavily amid rumours the Greek government will call a snap election following opposition to an austerity program involving new taxes and asset sales.

Bank of New Zealand currency strategist Mike Jones said it had been a changeable 24 hours for currency markets.

"The twists and turns of the Greek sovereign debt crisis continues to spur quite a bit of chop in risk appetite and currencies like the Australian dollar," Mr Jones said from Wellington.

"The net result is the Australian dollar has fallen to the bottom of the global currency performance rankings in the past 24 hours."

Mr Jones said weakness in the Australian dollar was linked to the belief that the European debt crisis eventually would take a toll on Australia and Australian funding markets.

"That's tended to dent the enthusiasm for the Australian dollar in the past week or so and, as a result, it has lost ground relative to most of its peers, the only real exception being the US dollar.

"The plight of Greece is likely to be the continuing theme over the next week and we are unlikely to see any resolution of the Greek debt crisis anytime soon, and while that's the case we are likely to see currency markets gyrate."

This morning, Reserve Bank of Australia (RBA) deputy governor Ric Battellino addresses a stockbrokers conference, which Mr Jones said may be a factor for currency markets to consider.

"He's got a bit of a history on being bullish on Australia's long term prospects and hence the Australian dollar does tend to rise around about the time that he's talking," Mr Jones said.

During today's local session, the Australian Bureau of Statistics releases March quarter capital expenditure data.

Mr Jones said he expected the Australian dollar to trade in a range between 104.90 US cents and 105.70 cents today.