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AAP

2013-01-03

The Australian dollar has moved higher, holding on to gains made in the wake of the US budget deal.

At 1700 AEDT on Thursday, the currency was trading at 104.84 US cents, up from 104.73 US cents on Wednesday.

It reached a fresh two-week high of 105.25 US cents early on Thursday morning (AEDT) as global share markets soared on news the US Congress had passed legislation preventing the so-called US fiscal cliff.

ANZ interest rate strategist Andrew Salter said the currency traded in a tight range during Thursday's local session, after jumping more than one US cent on Wednesday.

"We are just treading water at the moment but it was well supported overnight," Mr Salter said.

With the fiscal cliff out of the way, Mr Salter said currency markets would turn their attention to economic data, especially the release of the US non-farm payrolls report - a key indicator of US employment - on Friday night (AEDT).

Mr Salter said the market would also continue to experience a lack of liquidity due to the Christmas/New Year holiday period.

"There is quite a bit of data coming out over the next few days and that will provide direction to currency markets," he said.