Aussie dollar up as risk appetite increases

The Australian dollar opened higher on Monday as investors moved towards riskier assets after better than expected retail sales figures in the US.

At 0700 AEDT, the Australian dollar was $US0.9190/91, up 0.34 per cent from Friday's close of $US0.9158/61.

Since 1700 AEDT on Friday, the local unit traded between $US0.9147 and $US0.9194.

Bank of New Zealand currency strategist Mike Jones said the feeling in US markets on Friday was ``generally upbeat'' following the release of positive US retail sales figures, stronger Canadian employment figures and data showing European industrial production recorded the largest monthly increase since 1989.

``The data was certainly on the stronger side of the ledger, so we saw investor appetite for risk in pretty good heart,'' Mr Jones said.

US retail sales unexpectedly rose for the second month in February, despite severe winter storms that hammered large regions of the country.

The Commerce Department said that retail and food service sales increased 0.3 per cent from January to $US355.5 billion ($A388.48 billion), according to data unadjusted for price changes.

Mr Jones said most equities and commodity price indices were unchanged on Friday.

``But nevertheless they posted strong gains for the week and that really helped underpin the Aussie on Friday.''

The local unit was also assisted by reports over the weekend suggesting a bail out was likely for debt plagued Greece, he said.

``That's likely to be interpreted as positive for risk appetite and will likely support the Aussie as well.''

Reserve Bank of Australia (RBA) assistant governor Malcolm Edey will address the Cards and Payments Australasia 2010 Conference in Sydney on Monday morning.

``Given the ongoing speculation about how quickly the RBA's going to raise rates to slow the economy, the speech will occupy most of the market's focus,'' Mr Jones said.

``Markets are now priced for an RBA interest rate hike in May and there is potential for an April hike as well, so certainly markets are on alert for any suggestions he may be able to provide about when they may raise rates.''

Mr Jones forecast the Australian dollar would strengthen throughout the morning.

- NZPA