The Australian dollar has finished the overnight session higher following solid gains on global share markets, despite earlier hitting a fresh four-month low.
At 0700 AEDT on Thursday, the currency was trading at 102.35 US cents, up from 102.16 US on Wednesday afternoon.
Westpac New Zealand senior market strategist Imre Speizer said the currency dipped to 101.84 US cents early on Thursday morning, its lowest point since early October.
But, he said, the currency rose more than half a US cent from its low following strong performances from stock markets in the US and Europe.
In Europe, Germany's DAX 30 up 1.04 per cent while Paris' CAC 40 climbed 1.92 per cent.
In New York, the Dow Jones Industrial Average, the SP 500 and the Nasdaq were all up more than one per cent at 0700 AEDT.
'There has just been a general bounce in risk assets in the last hour or so. The SP is up 1.25 per cent and I think that has helped the currency,' Mr Speizer.
Mr Speizer said stock markets were rebounding after weakening in recent days over Italian election results and concerns about automatic spending cuts due to take effect in the US next month.
'Things have stabilised, the market isn't running away and panicking on the Italian election results just yet and its not running away and panicking on the US spending cuts just yet.'
Mr Speizer said the major driver for the Australian dollar on Thursday would be the 1130 AEDT release of domestic capital expenditure figures for the December quarter.
'That's the big story,' he said.
'There is a wide spread of expectations so there is a fair chance of seeing a reaction.'
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