The Australian dollar is a quarter of a US cent higher, after the release of better-than-expected German economic sentiment data gave the market a reason to be optimistic.
At 0700 AEDT on Wednesday, the local unit was trading at 103.58 US cents, up from 103.29 cents on Tuesday.
Since 1700 AEDT on Tuesday, the Australian dollar has traded between 103.01 US cents and 103.70 cents.
On Tuesday night, Australian time, a ZEW Centre for Economic Research report showed German economic sentiment in February hit its highest level since April 2010.
HiFX senior trader Stuart Ive said the figures gave markets a cause for optimism.
"Overnight, there was a bullish tone, the Dow Jones Index was up," he said from Auckland.
"There's still a two-tiered economy going on in Europe, you've got Germany pounding away and you've got France and others struggling.
"It gives us the impression that the global economies are beating a path to growth again, even though we have some signs of weakness, especially in Europe."
On Wednesday, the Australian Bureau of Statistics will release its wage price index for the December quarter.
Mr Ive said if wages growth is contained then inflation should be low enough to allow the Reserve Bank of Australia to cut the cash rate in the future, if needed.
During the local session on Wednesday, he expects the Australian dollar to reach a high of between 103.70 and 104.00 cents.