The Australian dollar is soaring towards 77 US cents amid an oil price rally.

At 0700 AEST on Wednesday, the local unit was trading at 76.83 US cents, up from 76.41 cents on Tuesday. The Australian dollar peaked at 76.90 US cents in overnight trade.

BK Asset Management managing director of FX strategy, Kathy Lien, said commodity dollars – the Aussie, the Kiwi and Canada’s dollar – were all surging on strengthening oil prices.

She said the oil rally was sparked by reports of Saudi Arabia and Russia agreeing to freeze production.

“This morning, the loonie rose to its strongest level in nine months versus the greenback and while similar milestones have yet to be reached by the Aussie and New Zealand dollar, both currencies came within 50 pips of multi-month highs,” Lien said in a note.

“The improvement in risk appetite also contributed to a move that will likely see new highs for all of the commodity dollars.”

Lien said the Australian dollar could get another boost if Chinese trade figures for March, due on Wednesday (AEST), are stronger than they were for February. The only local risk event on Wednesday is the Westpac consumer sentiment survey.

AAP

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