The sharemarket rose for a third-consecutive session after the dollar weakened further overnight. Non-resources companies with US dollar income remained in demand, although commodity price falls restrained the resources sector.
The benchmark S&P/ASX200 closed up 0.2 per cent at 5221.0 points after rising to 5227.1.
The index was up 12 per cent year to date, versus a 15 per cent rise in the S&P 500.
Share-trading volume shrank to $5 billion from $5.4bn yesterday as investors awaited the federal budget, which was to be announced by Treasurer Wayne Swan at 7.30pm AEST.
With the US dollar surging to a 4 1/2 year high against the Japanese yen overnight, the Australian dollar hit a fresh 11-month low versus the greenback, helping sustain a theme that helped push the Australian sharemarket to a five-year high of 5242.5 last week.
"We have the backdrop of the weaker Aussie flowing through to US dollar earners, although weaker commodity prices are keeping the resources names in check," said IG market strategist Stan Shamu. "That's the major theme and I think everyone is still repositioning themselves for a stronger US dollar."
Among Australia's major beneficiaries of a weaker exchange rate, CSL, News Corp, QBE Insurance, Brambles and Amcor rose between 1.2 per cent and 3.1 per cent.
QBE hit a more-than 1 1/2 year high as analysts said conditions for its US business improved. Deutsche Bank raised its price target on Australia's largest insurer from $15.06 to $16.25. Analyst Kieren Chidgey said that US commercial insurers' recent results point to 5 per cent-10 per cent premium rises in the first quarter of 2013, making QBE's target to raise its real-estate premiums 5 per cent this fiscal year look "increasingly achievable".
Among declining shares, Newcrest Mining, Fortescue Metals and Atlas Iron fell between 2.4 per cent and 4.2 per cent after spot iron ore slipped 0.2 per cent and spot gold fell 1.2 per cent yesterday.
Deutsche Bank cut its ratings on Newcrest, Resolute and Evolution Mining, after lowering its gold price forecasts overnight.
However, Rio Tinto slipped just 0.1 per cent and BHP Billiton rose 0.4 per cent after London Metals Exchange copper rose 0.6 per cent in overseas trading.
High-yield stocks mostly underperformed, with ANZ, Westpac, National Australia Bank and Telstra down between 0.2 per cent and 0.6 per cent, although Commonwealth Bank of Australia rose 1.3 per cent before tomorrow's third-quarter trading update.
