The Australian dollar has hit a two-week high, getting a boost after Malcolm Turnbull became the new leader of the Liberal party and prime minister designate.

At 0700 AEST on Tuesday, the currency was trading at 71.37 US cents, up from 70.90 cents on Monday.

Early on Tuesday morning, it peaked at 71.52 US cents, its highest level since September 1.

On Monday night, Malcolm Turnbull ousted Tony Abbott as federal Liberal leader, winning a partyroom ballot 54-44. He’ll be sworn in as prime minister on Tuesday.

Stuart Ive, senior client adviser, OM Financial, said the Australian dollar came under pressure when the leadership spill was announced, but rose after Turnbull won.

He said it’s hoped that the new prime minister will be a bit more proactive in getting the Australian economy going.

“The market decided that this was a good thing. Hence, the good performance in the Australian dollar despite stock markets coming off and metals being a little bit weaker overnight,”  Ive said.

“Abbott was performing poorly in the polls, there was no real momentum behind the economy during his term, so a fresh person gives fresh thinking.”

Kathy Lien, MD, BK Asset Management, said Australian dollar traders cheered Abbott’s defeat.

“However, Turnbull won by a very small margin and internal divisions within his party could lead to continued political uncertainty,” she said.

Ive said strong Chinese retail spending data, released over the weekend, had already elevated the Australian dollar helping it bounce back from heavy falls over recent weeks.

“On Friday, we saw metals come back, the US dollar weakened.

Ahead, was the US interest rate decision, he added.

“Obviously, we’ve got an intensive data week, especially with the Federal Reserve announcement,” he said.

Markets on Tuesday will focus on the release of the minutes of the Reserve Bank of Australia’s September board meeting, as well as the Bank of Japan’s monetary policy statement.

AAP