Positive sentiment from Europe and optimism surrounding US debt talks have pushed the Australian dollar to a near three-month high, despite a more negative domestic outlook.
At 1200 AEDT on Wednesday, the currency was trading at 105.31 US cents, up from 104.82 cents on Tuesday afternoon.
It reached a high of 105.43 US cents on Wednesday morning, its highest point since September 17, following a strong overnight trading session.
ANZ foreign exchange strategist Andrew Salter said the currency climbed higher following a surprise rebound in German business sentiment, which lifted global stock markets.
The Mannheim-based ZEW think tank's monthly indicator of economic sentiment rose to 6.9 points, a seven-month high, from minus 15.7 in November.
He said the currency also received a boost from news US President Barack Obama and House of Representatives Speaker John Boehner had exchanged proposals to avert the `fiscal cliff' of tax hikes and spending cuts due to apply in 2013.
"The market has perceived that as a step in the right direction and that has supported the currency," he said.
Mr Salter said the release of weaker monthly domestic consumer sentiment data on Wednesday, which followed poor business confidence figures on Tuesday, had weighed against the currency.
But he said both pieces of data had been overshadowed by global sentiment.
He said the currency was likely to remain above the 105 US cent level for at least the next few days.
Meanwhile, Australian bond futures prices were lower at noon.
At 1200 AEDT on Wednesday, the December 10-year bond futures contract was at 96.885 (implying a yield of 3.115 per cent), down from 96.955 (3.045 per cent) on Tuesday afternoon.
The December three-year bond futures contract was trading at 97.345 (2.655 per cent), down from 97.395 (2.605 per cent).