THE Australian dollar was higher as local consumer sentiment improved after the US Federal Reserve indicated that quantitative easing measures would be adopted soon.
At 5pm (AEDT), the dollar was trading at 98.46 US cents, up from Tuesday's close of 97.78 cents.
Since 7am today, the local unit traded between 98.56 US cents and 98.88 cents.
CMC Markets foreign exchange dealer Tim Waterer said the local unit firmed throughout the day after the US Federal Reserve spoke overnight about the need to begin quantitative easing measures.
"We saw a small uptick in the Aussie on the back of the confidence data this morning," Mr Waterer said.
"For the rest of the session it was mainly tracking the gold price higher."
Spot gold was trading around $US1355 on Wednesday.
"That dragged the Aussie dollar higher in afternoon trading as well."
Wall Street closed higher after the Fed said on Tuesday night (AEDT) that it saw a need to provide additional stimulus to prop up the US economic recovery "before long".
China's trade surplus shrank in September as exports and imports slowed sharply, official data showed on Wednesday.
Meanwhile, the Australian dollar reached another 25-year high of 62.54 pence against the British pound at 11:26am today.
The Westpac-Melbourne Institute Index of Consumer Sentiment for October rose 3.3 per cent to 117.0, well above the 100 level that separates optimists from pessimists.
Mr Waterer predicted the local unit would again push through the 99 US cent mark in overnight trade ahead of the release of US Producer Price Index (PPI) and jobless claims data on Thursday night.
"We could see it push back to 99 US cents, maybe not much further than 99.20 US cents until we see some more of that crucial US data out," he said.
At 4pm, the RBA's trade weighted index (TWI) was at 73.5, up from from Tuesday's close of 73.1.
