The Australian dollar rose to a two-week high against the US dollar and the yen on Thursday as the taste for risk returned and after strong July jobs data bolstered views that interest rates here will rise again.
Demand for high-yielding currencies, such as the Aussie dollar, was boosted by Wall Street stocks rising for a third straight session as concerns eased about the risks to credit markets of the fallout from the US subprime mortgage mess.
Such concern had contributed last week to big swings in global stock markets and pushed the Aussie to a five-week low of $0.8446 on August 1 from its July 25 18-year peak of $0.8871.
"I think that fear is maybe subsiding a little bit at the moment and on top of that the sense is that this still affects the US economy more than it affects the global or Australian economy," ABN Amro currency strategist Greg Gibbs said.
The Aussie dollar was quoted at $0.8659/64, compared with $0.8564/69 here late on Wednesday, according to Reuters data. Against the Japanese currency, it was quoted at 103.56/66 yen, up from 101.84/94 yen on Wednesday.
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