Dollar rises on EU deal announcement

THE Australian dollar rose half a US cent after a resolution was reached to help resolve the eurozone government debt crisis.

THE Australian dollar rose half a US cent after a resolution was reached to help resolve the eurozone government debt crisis.

A European Union official said the currency union's leaders have reached a deal with banks to take losses of 50 per cent of their Greek bonds in a key move to solve the eurozone's debt crisis.

By 12.53pm (AEDT) the local unit was 104.55 US cents, up from 104.12 cent before the deal was announced.

The Australian dollar ended the local session at 103.74 US cents yesterday.

At an emergency summit in Brussels, European leaders had already agreed to force banks to raise 106 billion euros ($A142.33 billion) by June - partially to ensure they could weather the expected losses on Greek debt.

They also neared agreement on boosting the firepower of the continent's bailout fund in order to prevent larger economies from finding themselves in need of a rescue like Greece's.

The leaders are under immense pressure to finalise their plan after multiple delays and half-baked solutions.

OZ Forex currency dealer Michael Judge said the Australian dollar was already rising ahead of the eurozone announcement because of optimism about a possible resolution.

"At the moment, all the momentum that's gathered has been pure optimism that the Euro leaders will come out and fulfill expectations," he said.

Since 7am (AEDT) today, the currency has traded between 103.95 and 104.85 US cents.

While the currency reported 20 to 30 points on the upside throughout morning trading, investors did not expect it to go above 105 US cents by the end of the day, Mr Judge said.

No bond figures were available due to technical difficulties at the Australian Securities Exchange today.