THE Australian dollar was higher at noon, riding on the coattails of positive sentiment across the Tasman where data shows the New Zealand economy grew unexpectedly in the second quarter.
At 1200 AEST, the local currency was trading at $US0.8756/60, up 0.45 per cent from yesterday's close of $US0.8718/20.
During the morning, the unit moved between $US0.8721 and hit a 13 months high of $US0.8790. It was the highest level for the Australian dollar since August 21, 2008.
The local unit was trading at $US0.8733 just before the release of the data showing NZ gross domestic product (GDP) increased by 0.1 per cent in the June quarter - after five straight quarters of contraction.
The quarter-on-quarter rise surprised financial markets and was interpreted as signalling the recession in New Zealand could be over.
But the nation's GDP had shrunk by an annual rate of 1.8 per cent to June 30, Statistics New Zealand said.
A senior trader with online currency firm Easy Forex, Francisco Solar, said the Australian dollar had followed the rise in the New Zealand unit on the back of the data.
"This morning we had a nice GDP result from New Zealand and that pushed the Kiwi dollar up and took the Aussie up with it as well,'' Mr Solar said.
"If they (New Zealand) are posting better-than-expected GDP numbers, what they does that mean for the Australian economy.''
Mr Solar said the Australian dollar was then supported later in morning trade as investors became more bearish about the US currency ahead of the US Federal Open Market Committee's (FOMC) decision on monetary policy due at 0415 AEST tomorrow.
Financial markets do not expect the US central bank to lift its federal funds rate from its target range of zero to 0.25 per cent.
"It is very much a US dollar weakness across the board and that is very much helping the Aussie post a new 13-month high this morning,'' he said.
"Markets are now looking for any cues from the FOMC tomorrow morning as we go from here.''
Meanwhile the Australian sharemarket was more than 1 per cent higher at noon, lead by oil and gold stocks.
At 1200 AEST, the benchmark S&P/ASX200 index was up 51.7 points, or 1.11 per cent, at 4715.4 while the broader All Ordinaries rose 53 points, or 1.13 per cent, to 4724.1.
On the Sydney Futures Exchange, the December share price index contract gained 41 points to 4728, on a volume of 10,424 contracts.
IG Markets research analyst Ben Potter said the market had opened strongly but was drifting back a little bit heading towards noon.
