THE dollar was higher at noon as a lift in investor sentiment toward risk increased demand for high yielding assets such as equities and commodity-driven currencies.
At 12:00 (AEDT), the dollar was trading at $US0.8936/41, up from yesterday's close of $US0.8932/34.
Since 07:00 AEDT, the local unit has traded between $US0.8926 and $US0.8952.
ICAP senior economist Adam Carr said the local currency was trading marginally higher as it followed an improvement in investor sentiment on financial markets after US Federal Reserve chairman Ben Bernanke said low interest rates were required to support the US economic recovery.
Dr Bernanke told a Congressional hearing overnight he expected US interest rates to stay low for an extended period.
The US Federal Funds rate has been in a range of zero to 0.25 per cent since December 2008.
The Dow Jones Industrial Average closed up 0.89 per cent, while the broad-market Standard & Poor's 500 index was 0.97 per cent higher.
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Asian markets followed the firm lead from Wall Street, withthe benchmark S&P/ASX200 index up 0.19 per cent by 12:12 (AEDT), while Japan's Nikkei-225 index was 0.58 per cent higher.
"Risk appetite improved last night on the back of the Fed,'' Mr Carr said.
"We are seeing the benefits of that in our session.''
Mr Carr said the stronger than expected rise in capital spending had given some support to the local currency.
New private capital expenditure rose 5.5 per cent in real terms, seasonally adjusted, in the December quarter, the Australian Bureau of Statistics said.
The median market forecast was for a rise of 1.5 per cent in the December quarter.
"The capex data is helping at the margin,'' he said.
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