The Australian dollar closed more than one cent higher as investors sought risk assets after BHP Billiton Ltd announced a new coking coal pricing structure and following better than expected US jobs numbers.
At 1700 AEDT, the Australian dollar was $US0.9108/11, up 0.8 per cent from Friday's close of $US0.9002/10.
Since 0700 AEDT, the local unit has traded between $US0.9069 and $US0.9116.
Citigroup economist Paul Brennan said the Australian dollar had moved steadily upwards during domestic trade.
"Generally speaking you've got a risk environment," he said.
US employment fell by 36,000 in February, surprising most analysts who projected 67,000 job losses because of snow storms that crippled the country's north-eastern region.
"Those figures certainly helped that risk environment," Mr Brennan said.
"Risk appetite is strong so the Australian dollar is a beneficiary from that."
If the mood holds, some analysts said the Australian dollar could be set to grind higher to $US0.9300, given Australia solid economic health.
"It's hard to not see how it's all going for the Aussie dollar right now," said Jonathan Cavenagh, an analyst at Westpac. "Australian firms are doing well and foreign investors are keen to buy Australian assets."
Sales of coking coal may be changed forever after BHP Billiton Ltd announced many of its customers had agreed to embrace short-term pricing.
BHP is the world's largest seller of coking coal, which is essential for steel making, and has been pressing for a greater use of short-term pricing based on spot markets for the commodity, and for iron ore, instead of the current benchmark system.
Together with the 40 to 80 per cent price increases that iron ore miners are expected to win for their contracts this year, the changes mean the Australian dollar could get a second wind, according to RBS analyst Greg Gibbs.
"The Reserve Bank of Australia has highlighted that companies in Australia are gearing up for a long period of growth in the resources sector and this will continue to underpin a relatively rapid rate of growth in the Australian economy," said Mr Gibbs.
Mr Brennan said the contract prices for coking coal were quite strong which had supported the currency.
"So they are probably the two main things that supported the currency," he said.
As well, the Australian share market closed at its highest level in just over six weeks, driven by a stronger materials and energy sector.
It was the local market's seventh consecutive positive trading day.
Mr Brennan said there was no important data to be released during domestic trade.
"There's not much in the US tonight either," he said.
He said the Australian dollar was likely to hold on to its gains into the offshore session.
