The Australian dollar rose after US Federal Reserve chairman Ben Bernanke said the tapering of economic stimulus was not on a pre-set course.
At 7am AEST the local unit was trading at 92.37 US cents, up from 92.08 cents at yesterday’s local close.
In testimony to Congress, the central bank boss said economic stimulus could be wound up next year if economic growth remained steady. But, he said, tapering of the Fed's $US85 billion-a-month bond purchase program was not a “pre-set course''.
ANZ senior manager FX in Auckland Sam Tuck said the US dollar fell on the comments, driving the local currency higher.
“The perception is that what he was trying to tell the market is that rate rises in the US are a long way off and, generally, more restrictive monetary policy conditions are still a long way off,'' Mr Tuck said.
“Just because tapering may be occurring, doesn't mean that the Fed actually wants to change the overall level of monetary policy accommodation.
“There's a bit more of a perception that tapering could be just a changing in the mix of tools used to provide a monetary accommodation rather than, necessarily, a reduction and US dollar strength has been predicated on the fact that it's a reduction of monetary policy accommodation because the economy is getting stronger.''