/www.fxserver.com/ THE Australian dollar stabilised its position above 56 US cents to close firmer today as the US dollar softened.
At 1700 AEDT, the Australian dollar was worth 56.16 US cents, trading at its lows for the day, compared with 56.04 at yesterday's close.
"There's been good two way flows," National Australia Bank strategist Michael Jansen said.
"But it's very comfortable above the 56 level."
He said the US dollar had weakened a little in local business and that had helped the currency, while the rumours of a takeover bid for miner MIM were adding steam to the Australian dollar's rally.
MIM yesterday said it was in early stage talks with Swiss based Xstrata which could lead to a change in ownership for the Queensland based company.
In the past couple of days the Australian dollar has recovered from the dip to 55.65 US cents and that has underlined the power of the interest rate premium that Australia enjoys, Macquarie Bank divisional director Geoff Bowmer noted.
The unit is marginally below rhe levels of 56.34 US cents that it closed at last week.
"There may be occasional dips as long positions get washed out but the reality is that you'll need fresh, and nasty, news to provide downward momentum," Mr Bowmer said.
Mr Jansen said the lower risk aversion was a boost for the Australian dollar.
"No one is in a mood to sell it and it is holding above 56 and will probably push higher over the next week to 56.75," he said.
The currency ranged from 56.16 to 56.29 US cents on the day.
It was at 68.94 yen from 68.58 and 55.99 euro cents from 56.03.
The euro was at 1.0029 US dollars from 1.0004 and 123.11 yen from 122.44.
The US dollar was at 122.77 yen from 122.38.