A big jump in China's trade surplus buoyed the Australian dollar as dealers bet that the world's second-biggest economy was recovering faster than expected.
China's monthly trade surplus widened to $US31.6 billion ($29.9bn) in December, from $US19.6bn in November. Economists had expected the surplus to remain at $US19.6bn.
"This news adds to the raft of positive anecdotes and news on the Chinese activity front in recent weeks and months," said Sue Trinh, senior strategist at RBC Capital Markets.
The dollar rose to an intraday high on the news, reaching $US1.055, from $US1.05 before the data. By 5pm AEDT, it had eased back to $US1.0549, up US0.41c.
Commonwealth Bank currency strategist Joseph Capurso said the dollar was likely to hold on to its gains during the US and European sessions overnight.
He said it was likely to be a quiet night of trading and did not expect the monthly meetings of the European Central Bank and Bank of England to have much impact on the market.
China is Australia's biggest trading partner due largely to its hunger for bulk commodities such as iron ore and coal.
The positive data from China bodes well for Australia's exports in coming months. The exports had suffered after a sharp fall in prices late last year as China's economy slowed.
Global prices for iron ore have risen almost 80 per cent from September last year, triggered by renewed demand from China's steel mills. Shipments of iron ore from Port Hedland in Western Australia, one of the world's largest export terminals for the commodity, jumped by 20 per cent last month alone.
Currency traders ignored local construction data, which showed a slight pick-up in approvals during November. The data is closely watched because the Reserve Bank has flagged the housing sector as a key gauge of the economy's strength.
Building approvals for residential houses and apartments rose a seasonally adjusted 2.9 per cent in November from October, the Bureau of Statistics said.
"November's relatively stable outcome is more representative of the underlying dynamics playing out in the construction industry and supports the view that the recent easing delivered by the (central bank) is perhaps finally starting to filter through to those interest-rate-sensitive sectors of the economy," said Tom Kennedy, an economist at JPMorgan.
Offshore, the focus for traders was expected to be the meetings of the European Central Bank and Bank of England, along with speeches by a slew of US Federal Reserve officials.
