Strong day for Aust dollar

SYDNEY - The Australian dollar closed firmer on Monday, touching a six-and-a-half week high on stronger Asian equity markets and a new round of US dollar selling.

At 1700 AEST, the Australian dollar was trading at US$0.8220/24, up from Friday's close of US$0.8162/65.

It was the currency's highest finish to a local trading day since June 3, when it ended the Sydney session at US$0.8244/48.

During the day, the unit moved between US$0.8148 and US$0.8228, the latter the Australian dollar's highest intraday trading level since June 11.

Barclays Capital currency strategist David Forrester said stronger commodities prices during Asian trading and the positive performance on regional equity markets supported the Australian dollar's move higher on Monday.

Sydney's All Ordinaries index rose for the 10th straight session, with bourses in Tokyo, Seoul, Hong Kong Shanghai and Wellington all up more than one per cent.

The price of crude oil was also higher.

Mr Forrester said the local currency was also buoyed by a fresh bout of US dollar weakness as Asian investors reacted to some positive economic data published last Friday night.

"The global economic recovery is still intact, we have had good US earnings data and all of this is weak for the US dollar," Mr Forrester said from Singapore.

"At the end of the day the US dollar is a low yield currency at the moment, and without risk aversion and its safe-haven status the US dollar doesn't offer much."

Despite the Australian dollar touching its highest levels in almost seven weeks during Monday's trading session, Mr Forrester said it was "too early" to confidently predict a sustained break higher.

Mr Forrester said the raft of US economic data due this week - particularly on economic growth, housing and corporate earnings - and the record US government debt issuance would keep market nerves "pretty raw".

"The general theme with FX markets these past few weeks is that there have been a lot of false breaks of important technical levels," Mr Forrester said.

"That's a function of investors in the FX market being quick to take profits.

"There haven't been any really solid trends and unfortunately I think that will stay the case."

Economic data due for release during Monday night's (AEST) offshore session included US new home sales data for June and a survey of manufacturing activity from the Dallas Federal Reserve.

CURRENCY TABLE: Currency snapshot at 1700 AEST

CURRENCY SPOT PREVIOUS CLOSE

AUD/USD 0.8220-24 0.8162-65

AUD/JPY 78.04-09 77.34-38

AUD/EUR 0.5762-69 0.5748-54

AUD/NZD 1.2495-04 1.2437-49

AUD/GBP 0.4978-85 0.4935-41

EUR/USD 1.4258-60 1.4198-00

USD/JPY 94.93-95 94.76-77

EUR/JPY 135.36-39 134.53-56

(*Closes taken at 1700 AEST previous local session)

At 1600 AEST, the Reserve Bank of Australia's trade weighted index (TWI) was at 65.1, up from Friday's close of 64.7.

- AAP jtc/lk