THE dollar closed higher on waning expectations for further interest rate cuts following the publication of sharply lower official inflation data.
At close, the dollar was trading at US81.61c, up from Tuesday's close of US81.15c.
During the domestic session, the unit moved between a low of US81.42c and a high of US81.74c.
CMC Markets foreign exchange dealer Tim Waterer said the local unit rebounded from its session lows after the publication of the consumer price index for the June quarter.
The data showed that the nation's annual rate of headline inflation was 1.5 per cent, down three per cent in June last year.
It was the slowest rate of inflation since June 1999, when the headline figure registered 1.1 per cent.
The unit rose to US81.67c shortly after the data was published at 11.30am AEST, from an intraday low of 81.41c recorded 20 minutes earlier.
"What the CPI did was lift the unit off its session lows," Mr Waterer said. "Whilst the CPI data came in with no real surprises, that did see the Aussie bounce and the main reason for that is any talk of a future Reserve Bank of Australia rate cut is waning."
At the close, the dollar was trading at 76.50 Japanese yen, up from Monday's close of Y76.20, and at 57.56 euro cents, up from 57.12 euro cents.
The euro finished at $US1.4200, up from Tuesday's close of 1.4190, and at Y133.12, down from Y134.11.
The US dollar finished at Y93.73, down from Y93.90.
The Australian bond market closed firmer.
The yield on the commonwealth government March 2019 bond was at 5.562 per cent, up from Tuesday's close of 5.515 per cent, while the yield on the April 2012 bond was at 4.650 per cent, up from 4.540 per cent.
At the close, the RBA's trade weighted index was at 64.6, up from Tuesday's close of 64.5.
