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SYDNEY, Feb 4 AAP

February 04 2013, 5:53PM

The Australian dollar is higher, after more encouraging US economic figures helped currency markets stay in a positive mood.

At 1700 AEDT on Monday, the local unit was trading at 104.37 US cents, up from 103.99 cents on Friday.

US jobs data released during the offshore session on Friday night showed a 0.1 per cent rise in the unemployment rate to 7.9 per cent in January.

However, what really took the market's eye was that monthly job growth in 2012 averaged 181,000, well above the prior estimate of 153,000 jobs.

CMC Markets senior trader Tim Waterer said the Australian dollar rose as the green shoots of the the American economy encouraged investors to move into riskier assets.

"The financial markets rally appeared to receive vindication from the raft of US data on Friday, with traders seeing the upward revisions to payrolls data as a vote of confidence for US economic progression," Mr Waterer said.

Meanwhile, the euro continues to trade at its highest levels against the US dollar in over a year.

On Monday, it finished the Australian session at 136.27 US cents, after peaking at 137.12 US cents on Friday, its highest level since November 2011.

"The euro continues to attract much of the buying flows with traders pricing out the disaster scenarios which plagued the currency in 2012," Mr Waterer said.

At 1700 AEDT on Monday, the Australian dollar was at 96.70 Japanese yen, up from Friday's close of 95.84 yen, and at 76.59 euro cents, up from 76.36 euro cents.

The board of the Reserve Bank of Australia will have its first meeting of the year on Tuesday and is expected to keep the cash rate at three per cent after cutting it by a quarter of a percentage point in December.

Mr Waterer said the Australian dollar is likely to trade in a tight range until the outcome of the RBA meeting.

Meanwhile, the Australian bond market was weaker.

UBS interest rate strategist Matthew Johnson said Australian bond futures prices had fallen through some key support levels amid the better US economic figures.

"The problem for our bond market is the US Treasury market is selling off, and that's because the US data doesn't look too bad," Mr Johnson said.

"If the US data keeps looking good and Treasuries keep selling off, then we're going to continue higher in yield (lower in price)."

At 1630 AEDT on Monday, the March 10-year bond futures contract was trading at 96.435 (implying a yield of 3.565 per cent), down from 96.500 (3.500 per cent) on Friday.

The March three-year bond futures contract was at 97.050 (2.950 per cent), down from 97.130 (2.870 per cent).

Mr Johnson expects the Australian bond market to continue to be influenced by US economic developments and movements in the US bond market.

By Jason Cadden