Dollar higher as US debt plan takes shape

THE dollar was nearly US1c higher this morning, after a bi-partisan plan to avoid a US debt default emerged in the US overnight.

THE dollar was nearly US1c higher this morning, after a bi-partisan plan to avoid a US debt default emerged in the US overnight.

At 7am (AEST), the dollar was trading at US107.32c, up from US106.41c yesterday.

Since 5pm yesterday, the local unit traded between US106.41c and US107.38c.

HiFX trading director Mike Hollows said the dollar had edged higher after US President Obama supported a plan to avoid US debt default.

A bipartisan group of US senators has offered a plan that could revive stalled debt talks. The deal proposes $US3.75 trillion ($3.55 trillion) in savings over 10 years and contains $US1.2 trillion ($1.14 trillion) in new revenue, Reuters reports.

"It looks like there is a glimmer of hope that they'll have the deal done by August 2 and that has given the market encouragement," Mr Hollows said.

The US dollar had been broadly weaker overnight as risk sentiment improved, he said.

Higher prices for commodities overnight also had boosted resource-driven currencies, such as the dollar.

Copper touched its highest level in more than three months as upbeat demand prospects in two of the world's biggest consumers helped to keep a surprisingly strong summer rally intact.

Mr Hollows said he expected the dollar to trade between US107c and US107.8c during the domestic session today.

In economics news today, the Westpac-Melbourne Institute Leading Indexes of Economic Activity for July are due.