The Australian dollar rose after Japan's central bank announced an expansion of its monetary stimulus plans.
At 7am AEDT the Australian dollar was at 105.66 US cents, up from yesterday’s local close of 105.55 cents.
BK Asset Management managing director Kathy Lien said news from the Bank of Japan's meeting yesterday had boosted the Australian dollar.
“The currency has held onto its gains over the past 24 hours,'' she said. “Its performance has been quite incredible, considering the euro currency is relatively unchanged, and the Aussie-yen cross has fallen quite a bit. I think it could be tied to a strong response in US equities.''
Yesterday the Bank of Japan announced that it was setting an inflation target of 2 per cent and would bring in an open-asset purchasing program to stimulate the country's economy.
The market was expecting monetary stimulus measures, given new prime minister Shinzo Abe's pledge to boost the economy with aggressive measures.
Australian inflation numbers, due for release today, would be the next event of importance for the Australian market, Ms Lien said.
“There's a real possibility that CPI (consumer price index) data will come in below the forecast,'' she said. “If that happens, it could re-ignite concerns about another rate cut.''
The Australian Bureau of Statistics will release CPI data for the December quarter 2012 today. An AAP survey of 15 economists on Monday revealed a median expectation of a 0.5 per cent increase in consumer prices over the quarter, with a 2.5 per cent rise over the year to December.
