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February 13 2013, 5:19PM

The Australian dollar climbed to its highest level in a week following a surge in consumer sentiment.

At 1700 AEDT on Wednesday, the currency was trading at 103.39 US cents, up from 102.55 cents on Tuesday.

On Wednesday afternoon it rose to 103.62 US cents, its highest level since February 6. research analyst Chris Tedder said the currency rallied following the release of consumer sentiment data at 1030 AEDT.

The Westpac/Melbourne Institute Consumer Sentiment Index rose by 7.7 per cent to 108.3 in February, its highest level since December 2010.

Mr Tedder said the figures lowered expectations the Reserve Bank of Australia would cut the cash rate again in March.

The RBA has cut the cash rate by a total of 1.75 percentage points between November 2011 and December 2012 but kept it on hold at 3.0 per cent at its first meeting for 2013 on February 5.

"The market took today's data as a sign the RBA is less likely to cut rates next month," he said.

He said the market had now priced in a 36 per cent chance of a rate cut for March, compared to the 46 per cent likelihood priced in at the start of Wednesday's session.

Mr Tedder said the next major event for the currency would be the release of US retail sales figures for January overnight on Wednesday.

But he said the Australian dollar was likely to weaken over the next few weeks.

"We still maintain over bearish view of the (AUD/USD) pair over the medium-term," he said.