The Australian dollar is higher, as market sentiment improves on the back of a positive outcome in the Greek bailout negotiations.

At 0700 AEDT on Monday, the local unit was trading at 78.44 US cents, up from 78.06 cents on Friday.

On Friday, Europe granted Greece a four month extension to its massive debt bailout, ending weeks of tension.

BK Asset Management, managing director, Kathy Lien is confident that Greece and its European partners will come to an agreement to avoid Greece leaving the euro zone. “The Australian and New Zealand dollars ticked higher as risk appetite improved,” Lien said.

“We have long been optimistic that an extension will be made and we still believe that both parties will reach an agreement to restructure Greek debt. Greek headlines will continue to affect how the euro and other major currencies trade in the coming week.”

In exchange for the extension, Greece has agreed to submit a list of economic and other reforms on Monday.

AAP