Dollar higher despite Euro fears

THE Australian dollar has moved slightly higher, recovering some of the gains lost in Monday's sell-off, despite renewed concerns about Europe's debt crisis.

THE Australian dollar has moved slightly higher, recovering some of the gains lost in Monday's sell-off, despite renewed concerns about Europe's debt crisis.

At 5pm AEST, the Australian dollar was trading at 101.70 US cents, up from 101.53 cents yesterday.

Since 7am AEST the currency has traded between 102.17 US cents and 101.69 US cents.

ANZ foreign exchange strategist Andrew Salter said the currency moved higher overnight and early today, but lost ground during the day.

"I think you could say that the Aussie traded with a heavy tone today," he said.

The currency fell more than one US cent on Monday amid a negative global reaction to French and Greek elections.

Socialist candidate Francois Hollande defeated incumbent Nicolas Sarkozy in French elections on Sunday.

Meanwhile, in Greek parliamentary elections, the ruling two-party coalition suffered heavy losses, casting doubt on the future of the country's austerity program and its membership in the euro zone.

Both election results have been seen as a rejection of the continent's austerity programs, enacted to reduce member nations high debt levels.

"There is an overhang of uncertainty with regards to Europe in the market and it is unclear how the voter backlash against austerity is going to affect European policymakers," Mr Salter said.

He said the Australian federal budget, to be released tonight was unlikely to have a major impact on the currency.

"A lot of it has already been factored in so I don't think there will be a lot of reaction, provided that the details are consistent with what has been flagged ahead of the release."