Stronger-than-expected Chinese trade data has kicked the sharemarket back into positive territory and the dollar above US90¢.
The benchmark S&P/ASX 200 Index clawed back more than half of its losses from Wednesday, lifting 1per cent to 5064.8 points.
The surge came after the exports of Australia's biggest trading partner, China, rose 5.1 per cent in July compared to a year earlier, while imports jumped 10.9 per cent. Economists had expected a rise of 3 per cent in exports and 2.1 per cent in imports.
St George Bank chief economist Besa Deda said that "helped the Asian sharemarket rally and that has fed on to the [local] currency".
But although investors warmed to the data, uncertainty about the health of world's second-biggest economy still lingers, Ms Deda said.
Despite the strong trade figures pushing the Australian dollar up half a cent to a one-week high of US90.55¢, Ms Deda expected the currency to come under pressure in the months ahead.
"I think by the end of the year you will have an eight in front and it will gradually drift lower," she said. "Today's data in China is positive but overall there is still some uncertainty about the Chinese economic outlook and I think that will pressure the Aussie dollar, too."
The dollar's lift came after it slumped more than half a cent to as low as US89.73¢ in early trade after the release of Australian employment figures showed the jobless rate remained at a four-year high in July, at 5.7 per cent, with the economy losing 10,200 jobs.
Arab Bank Australia trader David Scutt believed the dollar would rise in the short term rather than fall. "With no major data or events ahead, markets will leave the [US] Fed tapering [talk] for now and look for excuses to take the Aussie higher," he said, seeing the dollar as high as US93¢. "Lots of people are short."
Telstra led the charge on the ASX, rising 12¢, or 2.4 per cent, to $5.13 after it delivered a 12 per cent rise in annual net profit to $3.9 billion following strong growth in customers.
Rio Tinto firmed 88¢ to $59.48 as investors awaited half-year results, due out just as the market closed. BHP rose 1.2 per cent to $35.31.
The big four banks were higher, with ANZ up 29¢ to $29.39 and Commonwealth Bank 92¢ to $73, while NAB and Westpac advanced 0.7 per cent to $30.74 and 1.2 per cent to $30.91 respectively. With Reuters