The Australian dollar has hit a two week high after US politicians succeeded in passing legislation to avoid a potential economic crisis.
At 07:00 AEDT, the local unit was trading at $US1.0490, up from $US1.0473 yesterday.
In overnight trade, it peaked at $US1.0525, the currency's highest level since December 19.
Yesterday, the US Congress approved a bill rolling back a package of tax hikes and spending cuts that had threatened to push America back into recession -- a situation called the fiscal cliff.
BK Asset Management director Kathy Lien said optimism returned to global markets after the fiscal cliff was effectively avoided.
"The currency market kicked off the New Year with a bang after US lawmakers finally reached a deal to extend unemployment benefits and tax cuts for 99 per cent of Americans," Ms Lien said from New York.
"With a crisis being averted for the time being, there's a huge amount of relief in the markets."
Yesterday, the Australian dollar hit 91.52 Japanese yen -- its highest level since September 1, 2008.
"The US dollar and Japanese yen are trading lower across the board, fuelling a solid rally in risk currencies," Ms Lien said.
"The rally in the euro against the US dollar has been limited but commodity currencies are up approximately 1 per cent."
