THE Australian dollar was one US cent higher after the jobless rate hit a two-year low and shares rallied, boosting investor appetite for the local currency.
At 5pm AEDT, the local unit was trading at 99.52 US cents, up from 98.51 cents on Wednesday.
Since 7am on Wednesday, the Australian dollar traded between 99.20 US cents and 99.71 cents.
CMC markets currency strategist Tim Waterer said the Australian dollar initially fell half a US cent after the publication of Australian Bureau of Statistics (ABS) labour force data at 11:30am.
The data showed the jobless rate had hit a two-year low of five per cent, but jobs growth undershot expectations, adding 2300 instead of the 25,000 anticipated by the market.
"It had a reasonably solid end to the session," Mr Waterer said.
"The main event came this morning, with those employment numbers. Total employment has historically surprised on the upside, but it didn't now."
Despite the initial sell off, which saw the unit fall from 99.70 US cents to 99.20 US cents, the Aussie quickly recovered as the local share market posted its strongest day in six weeks.
At 4:15pm, the benchmark S&P/ASX200 index was up 71 points, or 1.5 per cent, at 4,795.2 points, while the broader All Ordinaries index was up 69.6 points, or 1.44 per cent, at 4,901.5 points.
Tonight official US trade, producer price and initial jobless claims data are due to be released.
The market is expecting a slight narrowing in the US international trade gap, a small increase in producer prices increase and an increase in the number of people claiming unemployment benefits.
Also overnight, US Federal Reserve chairman Ben Bernanke is expected to speak as part of a panel titled: "Overcoming Obstacles in Small Business Lending" in Arlington, Virginia.
The RBA's trade weighted index (TWI) was at 74.5, up from 74.0 on Wednesday.
