THE Australian dollar closed slightly higher today, as risk appetite made a cautious come-back after the central bank's shock decision to hold the cash rate steady.
At 5pm (AEDT), the Australian dollar was trading at $US0.8871/74, up from yesterday's close of $US0.8801/06.From 7am (AEDT), the local unit had traded between $US0.8883 and $US0.8829.
4Cast financial markets economist Michael Turner said the unit was lifted off its intra day lows in line with the local equity market.
"We pulled back our losses a little bit, but the range is pretty tight," he said.
"It was a pretty good night for equities (on Tuesday) and the Aussie has remained pretty buoyant."
The positive mood continued through out the trading day, leaving the local unit half a US cent higher than yesterday's close and the local share market almost one per cent higher.
At the 4.15pm (AEDT) close the benchmark S&P/ASX200 index added 42.6 points to close at 4,647.9 points, while the broader All Ordinaries index gained 0.96 per cent to 4,673.2 points.
Yesterday, the Reserve Bank of Australia shocked market observers by leaving the cash rate steady at 3.75 per cent.
Most market analysts predicted the bank would lift the rate to four per cent.
The local dollar shed one US cent to bottom out at $US0.8782 when the central bank's decision was announced at 2.30pm (AEDT).
It inched higher later in the day to close at $US0.8801/06.
During today's offshore session, mortgage applications in the US for January are due for release by the MBA and the ADP Employment report for January is also scheduled for release.
Meanwhile, the Australian share market has closed almost 1 per cent higher following positive results from media group News Corp and gains among resources giants.
The benchmark S&P/ASX200 index added 42.6 points, or 0.93 per cent, to close at 4,647.9, while the broader All Ordinaries index gained 44.4 points, or 0.96 per cent, to 4,673.2.
On the Sydney Futures Exchange at 4.29pm (AEDT), the March share price index contract was 35 points higher at 4,607, on volume of 31,221 contracts.
RBS Morgans Brisbane private client adviser Craig Walker said News Corp and miners BHP Billiton and Rio Tinto led the market higher.
"News Corp came out with pretty positive results before the market opened and that business is likely to see some analyst upgrades," he said.
"BHP and Rio are also contributing to the market."
Today, News Corp said it was emerging from the global recession with "renewed vigour and strength", reporting net profit in the second quarter of fiscal 2010 of $US245 million ($A276.46 million).
News Corp shares gained 91 cents, or 5.39 per cent, to $17.78 while the company's non-voting scrip increased 86 cents, or 6.04 per cent, to $15.10.
Among other media stocks, Fairfax Media added five cents to $1.775 and Consolidated Media rose seven cents to $3.15.
Mining giant BHP Billiton rose $1.04, or 2.57 per cent, to $41.50, while Rio Tinto gained 99 cents, or 1.39 per cent, to $72.00.
