Dollar up after positive news from Europe

THE Australian dollar is more than 1.5 US cents higher, after rising above parity thrice on a wave of confidence flowing from Europe.

THE Australian dollar is more than 1.5 US cents higher, after rising above parity thrice on a wave of confidence flowing from Europe.

It hit an overnight high of 100.15 US cents as Wall Street stocks gained almost three per cent after Germany and France pledged to devise a plan to shore up Europe's banks against a Greek default.

The local unit again touched parity around 8.30am (AEDT) and at around 1.00pm (AEDT) during the Australian day session.

ICAP senior economist Adam Carr said the driving force behind the strong Australian dollar was "all Europe".

"We saw some good European data out last night suggesting it's not in a recession as you would have thought," Mr Carr said.

At midday (AEDT) today, the Australian dollar was trading at 99.66 US cents, up from 98.33 cents on yesterday.

Since 7.00am (AEDT) today, the local unit traded between 99.59 US cents and 100.00 cents.

At 1.45pm (AEDT) the Australian dollar was trading at 99.69 cents.

"Plenty of people are talking about this recession, there's still no evidence of it," Mr Carr said.

"French industrial production, Italian industrial production and German exports were all significantly better than expected.

"We're not even close to recession."

German Chancellor Angela Merkel and French President Nicolas Sarkozy, met on Sunday to resolve the sovereign debt crisis.

After meeting in Berlin, President Sarkozy promised a "lasting, global and quick responses before the end of the month" to the eurozone government debt crisis that threatens to engulf banks and core eurozone countries.

Mr Carr said despite the talk of recession, positive data from Europe sparked positive risk sentiment and drove the Australian dollar upwards.

Meanwhile, the Australian bond market was weaker at noon.

At midday (AEDT) today, the December 10-year bond futures contract was trading at 95.635 (implying a yield of 4.365 per cent), down from 95.670 (4.330 per cent) yesterday.

The December three-year bond futures contract was at 96.280 (implying a yield of 3.720 per cent), down from 96.330 (3.670 per cent).