THE dollar opened higher today as positive sentiment carried into domestic trade after rumours of a bail out for Greece on Friday.
At 7am AEDT, the dollar was trading at $US0.8983/85, up 0.89 per cent from Friday's close of $US0.8904/07.
Between 5pm AEDT Friday and the local close, the unit traded between $US0.8870 and $US0.8979.
Bank of New Zealand currency strategist Mike Jones said the Australian dollar opened firmer following rumours of a bail out package for Greece on Friday.
European Union governments are piecing together a possible rescue package for Greece as they demand it first intensifies efforts to slash the blocs biggest budget deficit.
German lawmakers say euro-area officials are crafting a plan to grant Greece about 25 billion euros in aid should the need arise, possibly by using state-owned lenders such as Germanys KfW Group to buy its debt.
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But German Chancellor Angela Merkel and Luxembourg Prime Minister Jean-Claude Juncker signaled on Friday that Greece will be warned it must do more to regain control of its budget and cannot rely on taxpayers elsewhere to help until it does.
Mr Jones said the plan had put a backstop under risk appetite late on Friday after a strong close on European equity markets.
"That positive sentiment has spilt over into the morning session," Mr Jones said from Wellington.
"The Australian dollar was a strong performer on Friday night with commodity prices and equities doing well across the board."
He said the local currency nudged above $US0.8950 in overnight trade.
"We'll probably see it become a little bit stronger this morning," he said.
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