Dollar rises on encouraging housing data

THE Aussie dollar has risen more than half a US cent following calls from France and Germany to speed up measures to ease the eurozone crisis. 

THE Australian dollar rose almost one and a half US cents following better-than-expected housing figures in Australia.

The local currency edged upwards all day, reaching 103.09 US cents at 5pm AEDT today, up from Monday's close of 101.67 US cents.

It lifted to an early high of 102.75 US cents today, following the release of official data which showed the housing sector had strengthened in November.

Australian residential building approvals rose 8.4 per cent to 11,424 units in November, according to the Australian Bureau of Statistics.

Economists had forecast growth of 6.0 per cent for the month.

ANZ currency strategist Andrew Salter said there was a generally positive mood in the market.

"In this session, we've been underpinned by an improvement in risk appetite," he said.

Mr Salter said one exception was the Australian dollar's fall against the New Zealand dollar.

"We think it's because of the (Australian) retail sales data yesterday," he said.

"The market seems to be reassessing the relative performance of two economies."

Mr Salter said the potential for the Aussie to hold its ground at 103 US cents would be dependent on developments in both the US and Europe, with the former providing a boost to global markets since the beginning of the year.

"Overall, we see the recent rally in risk-related currencies such as the Aussie (dollar) as reflecting some of the stronger US data over recent weeks," he said.

"But the future situation really depends on some of the political meetings that are going on at the moment in Europe.

"It's difficult to call, because (German Chancellor Angela) Merkel and (French President Nicolas) Sarkozy could say a number of things, and the market would respond to them."

Positive news out of the first day of the US earnings season contributed to the local unit's strong open today, and both jobs and manufacturing remain strong in the US, according to recent data.

Mr Salter warned that the story in Europe was complex, and would require long term solutions.

"There are significant hurdles to overcome with the eurozone debt crisis," he said.

"(The European Union) is essentially asking its member states to embark on significant constitutional change and we think that process is going to be long and drawn out.

"There's a key summit on January 30 which will be the one to watch."

Since 6.50am AEDT today, the Aussie dollar has traded between 102.27 US cents and 103.20 US cents.