The Australian dollar is higher as a stream of strong data out of China boosts confidence about the world’s second biggest economy.

At 0700 AEST on Tuesday, the local unit was trading at 92.28 US cents, up from 91.98 cents on Monday.

The Australian dollar continues to be driven higher by better than expected August trade figures from China, showing that stronger exports to recovering overseas economies caused the Asian nation’s trade surplus to widen to $US28.6 billion ($A31.50 billion).

The customs figures were the latest to boost confidence about the state of the Chinese economy, following last week’s stronger manufacturing data.

BK Asset Management managing director Kathy Lien said continued signs of stabilisation in the Chinese economy had offset some anxiety in the foreign exchange market.

“While growth in the US has been uneven, there has been a persistent sign of stabilisation in China that lent support to the commodity currencies,” Lien said.

“Over the past month, we have seen evidence of improving manufacturing activity around the world and China is benefiting from the uptick in demand.

“Inflationary pressures are also under control with CPI growth slowing in August and producer prices falling which, combined with stronger Chinese trade activity, should provide relief to investors.”

Lien said commodity currencies would be further supported if industrial production figures, to be released in China on Tuesday, show continued strength.

AAP