Australian dollar has rallied, with analysts tipping it to hit US77 cents, as global risk appetite increases and after the greenback fell on weak US business productivity data.AUD$ v US$ Aug 2016

At 7am (AEST), the local unit was trading at US76.73 cents, up from US76.33 cents yesterday.

Westpac senior market strategist Imre Speizer said the US dollar lost more ground overnight after data showed a third consecutive quarter of declining output of US goods and services.

This is the longest stretch of falling productivity since 1979. “The US productivity and domestic labour costs data were disappointing and indicated that the Federal Reserve would not need to rush in with a rate hike,” he said.

“This pushed US interest rates lower overnight, which rubbed off the US dollar which also fell.

“Risk appetite was also strong last night which helped the Aussie.”

He said stronger commodity prices and the search for higher-yielding currencies would likely drive the local dollar to US77 cents this week.

SOURCE: The Australian Business Review