THE Australian dollar closed higher after the release of a positive consumer confidence report as market expectations firmed in the lead up to labour force figures on Thursday.
At 5pm AEDT, the Australian dollar was $US0.9151/53, up 0.64 per cent fromyesterday's close of $US0.9092/96.
Since 7am AEDT, the local unit traded between $US0.9133 and $US0.9158.
CMC Markets market analyst David Taylor said the local currency dropped overnight after the euro lost ground against the US dollar as uncertainty remained about the debt crisis in Greece.
"That created a bit of weakness for the Aussie, so we started on the back foot," Mr Taylor said.
On Wednesday the Westpac-Melbourne Institute consumer sentiment index rose 0.3 index points in March to 117.3 points, an increase of 0.2 per cent.
The RBA lifted the cash rate 25 basis points to 4.0 per cent, from 3.75 per cent, at its March board last week.
Australian housing finance commitments for owner-occupied housing fell 7.9 per cent in January, seasonally adjusted, to 51,056, the Australian Bureau of Statistics said during the session.
Economists expected the number of owner-occupier housing finance commitments to have risen by 2.0 per cent in January.
Mr Taylor said the local currency moved higher in afternoon trade.
"The market is also moving ahead of the employment rate tomorrow," he said.
Tomorrow, the ABS is due to publish its labour force data for February.
That data is expected to show employment to have risen by 10,000 in February, an unemployment rate of 5.4 per cent and a participation rate of 65.3 per cent, the median of 11 economists surveyed by AAP showed.
"The home loan data and the anticipation of better than expected unemployment rate tomorrow is helping it to recover from the worse than expected home loan data."
He said the local currency had been underpinned by a recent rally in commodities.
"Greece's debt problems are largely contained at the moment so with future rate rises planned there seems to be a nice little platform underpinning the Aussie at the moment."
Meanwhile, the Australian share market closed flat after eight consecutive trading day gains, as weaker mining stocks offset a stronger financial sector.
The benchmark S&P/ASX200 index closed down 0.1 points to 4,820 points and the broader All Ordinaries index gained 0.5 points, or 0.01 per cent, to 4,829.8 points.
On the Sydney Futures Exchange at 4.15pm AEDT, the March share price index contract was two points higher at 4,822 on 23,222 contracts.
CommSec market analyst Juliette Saly said banking stocks were generally stronger but mining stocks fell on profit-taking.
Ms Saly said worse than expected housing data had jolted the market.
Official data showed housing loan approvals fell by 7.9 per cent in January in seasonally adjusted terms, which compared with market expectations for a 2 per cent increase.
"When the data came out at 11.30am (AEDT), the dollar and the market both turned south and the market fell by six or seven points immediately following the release of the data," Ms Saly said.
"Consensus was for a gain of 2 per cent and, as we already had a slump in December, we were expecting a pick-up," she said.
Most major banks were strong although the National Australia Bank fell seven cents to $26.80 following strong gains in recent days.
Commonwealth Bank rose 48 cents to $55.69, ANZ increased 12 cents to $23.94, Westpac put on 36 cents to $27.33 and Macquarie Group was up 22 cents to $49.05.
