THE Australian dollar closed one US cent higher, boosted by positive investor sentiment after the Federal Government's tax compromise with the mining industry.
At 5pm (AEST), the Australian dollar was trading at 84.58 US cents, up from yesterday's close of 83.59 cents.
From 7am (AEST), the local unit traded between 85.09 US cents and 84.21 cents.
The Australian dollar was boosted early in the trading day by news the federal government had reached a compromise with the mining sector over the terms of its proposed resource rent tax, CMC markets foreign exchange dealer Tim Waterer said.
Basically, the changes that were announced today have had a positive effect on the Australian dollar," he said.
"We saw the Aussie take quite a hit when (then prime minister) Kevin Rudd announced the tax in May.
"The news today was certainly a positive."
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This morning, Prime Minister Julia Gillard announced the Government had scrapped its 40 per cent resources super profits tax, for a minerals resource rent tax at a rate of 30 per cent.
Ms Gillard said the nation could now move on, with Australians getting a fairer share of mining wealth.
Controversy over the tax was a factor in unseating former prime minister Kevin Rudd last week and contributed to domestic share market uncertainty over the past few months.
Mr Waterer said the local unit had trouble holding on to its intraday high as investors shifted their focus to upcoming US employment data.
During the offshore session today, the US Labour Department will publish its non-farm payrolls data for June.
The median market forecast is for employment to have fallen by 130,000 in the month and for the jobless rate to have grown by 0.1 percentage point to 9.8 per cent.
"It's going to be the main focus," Mr Waterer said.
"We're not expecting a fantastic number, so we have to see how the market treats the greenback tonight and how the Aussie does after that."
At 5pm (AEST), the Australian dollar was at 74.48 Japanese yen, up from yesterday's close of 73.97 yen, and at 67.70 euro cents, down from 68.43 euro cents previously.
The euro finished at 1.2247 US dollars, up from Thursday's close of 1.2216 US dollars and at 110.01 yen, up from 108.09 yen.
The US dollar was at 88.07 Japanese yen, down from 88.48 previously.
Meanwhile, the Australian bond market closed weaker.
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