Dollar rallies on Asian equities, Ireland

THE dollar was higher today after a morning rally driven by strong performances in equities and news of a bail-out for Ireland.

THE dollar was higher today after a morning rally driven by strong performances in equities and news of a bail-out for Ireland.

Since 5pm (AEDT) on Friday, the dollar was trading at US99.15c, up from Friday's close of US98.46c.

Since 7am today, the local unit traded in a range between US98.64c and US99.18c.

Commonwealth Bank chief currency strategist Richard Grace said it was likely that euro strength had assisted the local unit.

"The euro is up as a partial resolution to problems in Ireland was reached," Mr Grace said.

"The leg up in the Aussie may have more to do with positive opening in stock markets in Asia, so it might be a combination of the two.

"Interest in equities was supporting the Aussie."

The US dollar was not sold off greatly, he said.

Japanese shares opened higher today, with the Tokyo Stock Exchange's Nikkei index rising 109.87 points, or 1.10 per cent, to 10,132.26 in the first minutes of trading.

The share market was higher at noon, as investors were buoyed by a proposed bailout for Ireland.

Irish Prime Minister Brian Cowen says the European Union has agreed to Ireland's request for a multi-billion euro bailout amid fears the debt-laden nation could spread contagion to weak euro economies.

"I can confirm that the government has made a request to the European Union and they have agreed," Cowen said at a press conference, adding that the International Monetary Fund also will be involved.

"EU and euro-area financial support will be provided under a strong policy program which will be negotiated with the Irish authorities by the (European) Commission and the IMF, in liaison with the ECB (European Central Bank)," he said.

Mr Grace expects the local unit to push higher in afternoon trade.

"The euro should head up ... and that will probably take the Aussie with it if it's associated with higher equity markets in Europe and the US," he said.