The Australian dollar has backed away from its two month high as traders sell the currency and take profits.

At 0700 AEST on Friday, the local unit was trading at 94.02 US cents, down from 94.23 cents on Thursday.

In overnight trade, it peaked at 94.33 US cents, its highest level since April 10, after US Federal Reserve chair Janet Yellen said she would keep the federal funds rate steady for a “considerable time” despite a recent spike in inflation.

The comments saw the US dollar fall against all the major currencies and helped push the Australian dollar back through 94 US cents.

Bank of New Zealand strategist, Kymberly Martin, said the major currencies were starting to stabilise after the big moves following the US Federal Reserve policy meeting.

“With US economic data steadily improving over the quarter, investors had braced for Fed Chair Yellen to be at least slightly more upbeat,” she said.

“This was not to be.

“Thus, we begin this morning with major currencies having broken big levels.”

Martin said a fall in the number of people claiming unemployment benefits in the US last week also helped stop the US dollar’s decline.

AAP