The Australian dollar opened higher as traders overnight moved back to risks assets as fears eased over Irish sovereign debt.
At 0700 AEDT on Tuesday, the Australian dollar was trading at 98.80 US cents, up from Monday's close of 98.18 cents.
Since 1700 AEDT on Monday, the local unit traded between 98.10 US cents and 99.20 US cents.
Overnight, Irish officials said the government was in contact with "international colleagues" over its debt crisis but denied seeking a bailout.
The Irish government said it is fully funded until well into 2011 and is continuing to work on the four-year budgetary plan and the budget for 2011.
Ireland's cost of borrowing hit record highs last week, fuelling fears over eurozone debt.
HiFX senior trader Stuart Ive said the easing concerns over Ireland help the Australian dollar move back up towards 99 US cents.
"The main reason for the bounce overnight is there has been a little bit of a calming in the markets in terms of the whole situation with Ireland and Europe," Ive said.
"Really, it did help establish more risk being placed in the market.
"The Australian dollar has had a very good run overnight, coming off its lows from yesterday evening and tracking to a high of 99.20 US cents."
In Tuesday's local session, the Reserve Bank of Australia (RBA) releases the minutes of its November 2 board meeting.
"Whilst I don't think there is anything too surprising in those minutes, it will be the main feature. There won't be anything else out (on Tuesday)," Ive said.
The main influence on the Australian unit for the rest of week would be continuing developments over European sovereign debt, he said.
He expected the Australian dollar to trade between 98.00 and 9940 US cents on Tuesday.
