Australian dollar strengthened by US rate comments

THE Australian dollar was higher at noon (AEST), after the US Federal Reserve said interest rates could stay at their record lows until mid-2013.

THE Australian dollar was higher at noon (AEST), after the US Federal Reserve said interest rates could stay at their record lows until mid-2013.

At 12pm today, the Australian dollar was trading at 103.21 US cents, up from 102.25 cents on yesterday afternoon.

Since 7am, it had traded between 103.13 US cents and 104.18 US cents.

RBC Capital Markets currency strategist Michael Turner said the Australian dollar rallied around three US cents overnight, after the US Federal Reserve said it was likely to keep interest rates at their ultra-low levels for the next two years.

"They also left the door open for further quantitative easing (injection of cash into the banking system) and that's prompted a fair bit of US dollar weakness and the Aussie's been the beneficiary of that," Mr Turner said.

At 10.30am, Westpac and the Melbourne Institute reported that their consumer sentiment index had fallen by 3.5 per cent in August.

The report found that concerns about the state of the global economy had added to persisting worries about interest rates, housing prices and the government's planned carbon tax.

Just over three quarters of respondents answered the survey prior to August 5, when markets were hit by the turbulence.

Mr Turner said the result was not as bad as some were expecting.