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Dollar higher

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The Australian dollar is higher, supported by optimism about the local economy and the possibility of the euro zone getting more economic stimulus.

Early Monday, the local unit was trading at 93.90 US cents, up from 93.75 cents on Friday.

Over the weekend, European Central Bank (ECB) president Mario Draghi said he might have to take action if the euro rises any further.

OM Financial senior client adviser Stuart Ive said the possibility of a lower euro zone interest rate or economic stimulus from the ECB was a key focus for currency markets.

“He’s indicated that the ECB is ready to act and the euro has opened 50 points lower (against the US dollar) and the Aussie is considerably higher against the euro,” Ive said from Wellington.

The Australian dollar is at 67.83 euro cents, up from 67.47 on Friday.

Last Thursday, the Australian dollar rose past 94.50 US cents after it was reported that the local unemployment rate for March fell of 0.3 percentage points to 5.8 per cent.

The currency had a bit of a fall on Friday but, Mr Ive said, the positive outlook for the Australian economy will continue to give the local currency support.

“Since the start of this year, the economic data for Australia has been slowly getting better,” he said.

“The employment data last week certainly surprised the markets, so that’s two good numbers on the trot. It’s always good news when that happens.

“It shows there is a bit of strength coming through on the Australian economy and that will always underpin the Australian dollar.”

Ive said the next major focus for markets would be the release of the minutes of the Reserve Bank of Australia’s April board meeting on Tuesday.

He expects the currency to trade in a range between 93.50 and 94.25 US cents on Monday.

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