Dollar pushes higher as markets settle

THE dollar was nearly US1c higher this morning, as the dust settled after last week's wild ride.

THE dollar was nearly US1c higher this morning, as the dust settled after last week's wild ride.

At 7am (AEST), the dollar was trading at US103.68c, up from US102.8c on Friday.

Since 5pm on Friday, the local unit traded between US102.46c and US103.76c.

It hit a peak of US110.81c on July 27, its highest level since the fixed exchange rate era ended with its float in December 1983.

Bank of New Zealand currency strategist Mike Burrowes said the dollar had climbed steadily since early Friday evening, driven by a recovery in European equity markets.

European markets rallied on Friday after France, Belgium, Spain and Italy banned the speculative practice of short-selling stocks to combat "false rumours" that have destabilised them.

Sentiment was further boosted after Italy approved a 45 billion euro ($61.46 billion) austerity program, including local government cuts and a "solidarity tax" on high income earners in a bid to get out of a debt crisis.

Mr Burrowes said traders were now waiting for the minutes of the Reserve Bank of Australia's (RBA) August board meeting, due on Tuesday.

"The RBA board minutes will be pretty key for the Aussie dollar, given the market has about 50 basis points of cuts priced in at the next meeting," Mr Burrowes said.

"You'd expect there would have to be some fairly clear hints that they (the RBA) discussed the potential for cutting rates in the near term to validate that pricing."

He said new motor vehicles sales for July, due this morning, was of secondary importance.

"Aside from that it is going to depend on incoming data from Europe and the US and what that implies for global growth," he said.

The US market ended higher on Friday as trade calmed at the end of one of the most turbulent weeks on record.

Wall Street stayed in positive territory all day after a week characterised by sudden 400-point swings and daily losses and gains of about five per cent.

Mr Burrowes said the dollar was expected to trade between US103.15c and US104.2c during the domestic session today.