Dollar opens higher

THE dollar opened higher this morning.

THE Australian dollar opened higher today as debt fears in Ireland and concerns about interest rate rises in China subsided, providing support for risk-sensitive currencies.

At 0700 AEDT today, the Australian dollar was trading at 98.93 US cents, up from yesterday's close of 98.54 cents.
Since 0700 AEDT on Thursday, the local unit traded between 98.44 US cents and 99.06 US cents.

Bank of New Zealand currency strategist Mike Jones said positive sentiment overnight had helped the local unit.

"Overall, we've seen sentiment towards growth-sensitive currencies rise noticeably over the past 24 hours,'' Mr Jones said.

"All the fears about the fiscal health of Ireland and Chinese rate hikes seemed to have disappeared overnight and, as a result, equity markets have posted strong gains, commodity prices rose and, against that backdrop, investors generally sold safe-haven currencies like the US dollar.''

That caused the Australian dollar and other risk-sensitive currencies to climb higher.

But the gains were capped after the release of positive US data and a strengthening US dollar.

Ireland could receive "tens of billions'' of euros as part of an EU/IMF bailout, the head of Ireland's Central Bank said yesterday as an international mission of experts arrived in the country.

The bank's governor, Patrick Honohan, said it was his "expectation'' that a "very substantial loan, tens of billions'' would be made to prop up Ireland's crisis-hit economy.

US stocks bounded higher on Thursday on strong interest in General Motors' initial public offering and growing confidence that Ireland will resolve its debt crisis.

The Dow Jones industrial average had jumped over 180 points in late afternoon trading, following European markets higher. US shares got another boost after from a surprisingly strong reading on regional manufacturing from the Federal Reserve Bank of Philadelphia.

Mr Jones said traders would look to Asian equity markets for direction in the absence of local data.

"If we see equities open stronger that might be an impetus for the Aussie dollar to reach higher,'' he said.

The local unit would trade between 99.20 US cents and 99.06 cents, he predicted.