The Australian dollar has drifted higher as disappointing comments from the US central bank knock the wind out of the greenback’s sails.

At 0700 AEDT on Thursday, the local currency was trading at 80.78 US cents, up from 80.73 cents on Wednesday.

The Australian dollar came under pressure against a surging US dollar on Wednesday, falling to a fresh five and a half year low of 80.33 US cents overnight.

But the tide turned for the Australian dollar after minutes from the US Federal Reserve’s last meeting were less upbeat than the market was expecting, BK Asset Management MD Kathy Lien, said.

The minutes, released on Thursday morning AEDT, said the sharp fall in oil prices would be beneficial to the economy.

But Fed chair Janet Yellen said the central bank was unlikely to begin raising rates “for at least the next couple of meetings”.

The minutes sparked a slide in the greenback, giving the Australian dollar a leg up, Lien said.

“The minutes were not as good for the US dollar as the market had anticipated,” she said.

“It seems that the market was positioned for more hawkishness in the minutes and the fact that they did not get that, I think, led to a little bit of a relief rally in the Aussie dollar.”

Coming up on Thursday are local building approvals figures at 1130 AEDT which are expected to show a three per cent drop in approvals for the construction of new homes in November.

AAP