The Australian dollar hit a one month high, buoyed by weakness in the US dollar and stronger gold and iron ore prices.

At 0700 AEST on Friday, the local unit was trading at 78.00 US cents, up from 77.39 cents on Thursday.

The US dollar slid overnight in the wake of Thursday’s downgraded interest rate projections from the US Federal Reserve, sparking the Aussie to peak at 78.49 US cents, its highest level since May 22.

Kathy Lien, MD, BK Asset Management FX Strategy, said the Fed meeting, which disappointed the market, was outweighing positive US economic data on the greenback.

Lien said the Australian dollar had also been supported by strong commodity prices overnight.

“With no Australian data, the move was fuelled primarily by higher gold and iron ore prices,” she said.

“We are a bit surprised by the strength of Australian dollar especially considering that the RBA is threatening to ease.”

Westpac market strategist, Imre Speizer, said if an Aussie break above 78 US cents was sustained, 79.35 US cents would be the next target.

AAP