Aussie dollar up more than one US cent

THE Australian dollar jumped just over one US cent in response to a weakening US dollar.

THE Australian dollar jumped just over one US cent in response to a weakening US dollar.

The American currency weakened as the US Federal Reserve went against market expectations to keep interest rates on hold after its latest policy-making meeting.

At 5pm AEST today, the local unit was trading at 103.79 US cents, up from 102.77 cents on Tuesday.

Since 7am AEST today the Australian dollar traded between 103.51 US cents and 103.83 cents.

Commonwealth bank currency strategist Joseph Capurso said the US dollar's weaker performance pushed the local currency higher.

The US Federal Open Markerts Committee (FOMC) decided to keep already ultra low official rates on hold at the meeting, surprising some market-watchers.

Mr Capurso said there had been some expectation that interest rates would be lifted, given improved economic data in the US in recent months.

"They're not considering lifting interest rates, or bringing forward the time when they might lift them," he said.

"There were some out there who thought that because the US economy was going okay, the Fed would say that they'd lift the funds rate earlier - that didn't happen, and the US dollar fell."

The two-day FOMC meeting was on Tuesday and Wednesday (US time).

"The Aussie's been a little bit stronger today, and it's really because the US dollar has been weaker against most currencies," Mr Capurso said.

"I think what we're going to get during the London session, which is just starting, is that the US dollar will keep weakening as the London market digests FOMC meeting."

The Aussie dollar could rise on more international headlines on Friday, Mr Capurso said.

The big news tomorrow was the Bank of Japan (BOJ) meeting, and the US gross domestic product result, he said.

"I think if the BOJ doesn't ease (interest rates), it will weaken the US dollar

"But I think we'll get a pretty good number for the US GDP, which will probably stabilise the US dollar again."