Dollar up on expected G20 euro plans

THE dollar surged more than one US cent on hopes world finance leaders will announce a plan to tackle Europe's sovereign debt crisis.

THE Australian dollar surged more than one US cent to a one-month high on optimism that world finance leaders were close to announcing a comprehensive plan to tackle Europe's sovereign debt crisis.

Speaking on Saturday after a meeting of the Group of 20 (G20) finance ministers and central bankers in Paris, French Finance Minister Francois Baroin said the eurozone will take swift and decisive action to resolve a debt crisis that's threatening to drag the world economy back into recession.

G20 nations, which represent 85 per cent of the global economy, are seeking to come up with concrete steps to boost growth that their leaders can announce at a summit next month.

Traders were heartened by the strong comments out of Paris and bought up risk-assets, like the Australian dollar, said Imre Speizer, senior market strategist at Westpac New Zealand.

At 7.00am (AEDT) today, the local unit was trading at 103.32 US cents, up from 102.23 cents on Friday. It earlier reached 103.50 cents, the highest since September 16.

"It was really on expectation of what they thought might come out and they guessed roughly right," Mr Speizer said.

"There is a grand plan in the pipeline, the main elements being the EFSF (European Financial Stability Facility), re-capitalising the banks, funding Greece and a bit about changing their (Greece's) laws to make sure they behave economically in the future."

Mr Speizer said investors were now expecting the G20 to formally announce their plan in the next two weeks.

"That means that each of the weekends from here on for the next two weekends, (sentiment) is going to be dominated by European headlines about the grand plan."

He expected the Australian dollar to trade lower on the day but to regain strength later in the week.