Dollar up on better consumer sentiment

THE Australian dollar is almost one US cent higher after the release of encouraging local consumer sentiment figures.

THE Australian dollar is almost one US cent higher after the release of encouraging local consumer sentiment figures.

At 12pm AEDT today, the local unit was trading at 103.42 US cents, up from 102.55 cents yesterday.

This morning, the Westpac consumer sentiment survey was released and showed a rise in February for the second month in a row.

CMC Markets senior trader Tim Waterer said the Australian dollar also got a boost from the S&P/ASX200 rising the 5,000 mark for the first time in almost three years.

"We've seen some decent domestic economic numbers coming out, which have played a part, but we've also seen some pretty solid buying momentum generally on Asian equity markets," he said. "Right now there are some head winds for the Australian dollar, we're still not seeing any improvement from the patchy macro data we've seen in recent months."

Mr Waterer said the possibility of another cash rate cut by the Reserve Bank of Australia would also continue to weigh on the Australian dollar. Key economic events this week include the Japanese central bank meeting tomorrow and the summit of G20 central bankers and finance ministers in Moscow tomorrow and Friday.

"The hot topic at the moment is currency devaluations or currency wars at it's been dubbed," Mr Waterer said. "Comments from G20 will set the tone for currency markets later on in the week."

The Australian bond market was weaker at noon. At 12pm AEDT today, the March 10-year bond futures contract was trading at 96.505 (implying a yield of 3.495 per cent), down from 96.570 (3.430 per cent) yesterday. The March three-year bond futures contract was at 97.140 (2.860 per cent), down from 97.220 (2.780 per cent).