A spike in global oil prices has propelled the Australian dollar higher.

At 0700 AEST on Wednesday, the local unit was trading at 77.49 US cents, up from 77.00 cents on Tuesday.

“The overall tone flipped to a slightly risk-positive one overnight,” Westpac strategist Imre Speizer said.

Brent crude prices are up 3.80 per cent at $US46.17 and WTI crude is 4.27 per cent higher at $US44.46 at 0719 AEST.

Also, the greenback had weakened slightly, helping pro-risk currencies such as the Aussie, Speizer said.

He tipped Wednesday’s local highlight to be Australia’s March quarter inflation print.

Tumbling fuel and fruit prices are likely to have kept a lid on inflation in the first few months of 2016, leaving room for a central bank interest rate cut.

Speizer said the currency is being supported for now, suggesting a drift towards 78 US cents.

“Any (consumer price index) surprise will dominate though,” he said.

Westpac expects the greenback to eventually find its feet and help drag the Aussie lower.

“However, over the next month, the Fed’s cautious stance is likely to continue weighing on the US dollar, posing upside risks for the Australian dollar,” Speizer said.

AAP

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