The Australian dollar has opened higher on Wednesday following firmer equities in Europe.

At 0700 AEDT, the Australian dollar was trading at $US0.8943/46, up 0.72 per cent from Tuesday’s close of $US0.8880/82.

It was the highest start to the local session since December 17, 2009, when the currency began trade at $US0.8992/96.

During the offshore session, the local unit traded between $US0.8879 and $US0.8993, according to IRESS data.

Westpac senior currency strategist, Richard Franulovich, said the local currency rose as equities and the euro in European trade.

European sharemarkets closed higher, with London’s FTSE 100 up 0.65 per cent, while France’s CAC 40 ended 0.33 per cent higher at a 15-month high of 3,959.98.

“It (the Australian dollar) motored higher in London on the back of a higher euro, but then the euro has collapsed in late morning (US trade),” Mr Franulovich said from New York.

“The Aussie has managed to lock in its strength.

“It was a pretty thin market and it only took a couple of buyers to set it off.”

Traders are cautious about large moves on currency markets due to thin trade at this time of year, Mr Franulovich said.

“It is two days before year-end, (and) there are not too many buyers out there,” he said.

“It only takes a few buyers to move it a lot.

“It is more technical conditions driving these currencies rather than anything fundamental.”

Mr Franulovich forecasts the Australian dollar to trade between $US0.8915 and $US0.8980 during the Asian session on Wednesday.

There are no local economic data due on Wednesday.