THE dollar was more than one US cent higher at noon, as an unexpected fall in the nation's jobless rate lifted the prospect of an interest rate rise next month.
At 12:00 (AEDT), the dollar was trading at $US0.8859/62, up 1.28 per cent from yesterday's close of $US0.8746/51.
Since 07:00 AEDT, the local unit traded between $US0.8750 and $US0.8867.
The unemployment rate was a seasonally adjusted 5.3 per cent in January, compared with an unrevised 5.5 per cent in December, the Australian Bureau of Statistics said.
It was the lowest rate of unemployment since February 2009.
Total employment rose by 52,700 to 10.966 million in January, seasonally adjusted.
Full-time employment rose by 15,900 to 7.652 million in the month while part-time employment was up by 36,900 to 3.314 million.
The median market forecast was for total employment to have risen by 15,000 in January and an unemployment rate of 5.6 per cent.
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Royal Bank of Scotland foreign exchange strategist, Greg Gibbs, said the dollar had performed strongly since the release of the jobs data.
The currency was trading at $US0.8772 just before the release of the data at 11:30 AEDT.
"It is initiated by the strong employment report," Mr Gibbs said.
"(It was) a massive surprise to the market and it is performing accordingly."
Mr Gibbs said the jobs report had lifted market expectations of the Reserve Banklifting the overnight cash rate at its next board meeting on March 2.
The RBA surprised financial markets when it left the cash rate unchanged at its meeting on February 2.
Higher interest rates can support a currency as investors move funds to where they earn the highest returns.
Australia's key benchmark rate of 3.75 per cent compares to Japan's 0.1 per cent and zero to 0.25 per cent in the US.
"There is still some doubt on what they will do, but there is a school of thought now that they will go next month," Mr Gibbs said.
For the rest of the Asian session, Mr Gibbs forecasts thedollar to trade between $US0.8800 and $US0.8920.
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