The Australian dollar gained after rises on US sharemarkets helped the currency rebound from an earlier sell-off.

At 7am AEDT the currency was trading at 104.12 US cents, up from 104.06 US cents at yesterday’s local close.

BK Asset Management managing director Kathy Lien said the currency fell as low as 103.71 US cents overnight following the Reserve Bank of Australia's (RBA) February rate decision meeting. The RBA kept the cash rate on hold at 3.0 per cent but said a benign inflation outlook gave it room to ease further if necessary.

Ms Lien said the currency rebounded early today amid a rally on US stock markets that send the Dow Jones Industrial Average close to a fresh five-year high.

“Towards the end of the US session, the Aussie dollar did gain a bit of upside momentum. That is entirely due to the rise in US stocks, which are primed to break a new five-year high,'' she said. “That risk-seeking environment is lending support to the Aussie.''

Meanwhile, the Australian dollar climbed to a fresh four-and-a-half-year high against the Japanese yen.

At 7am AEDT it was buying 97.20 Japanese yen, its highest level since August 2008.

Ms Lien said the key local driver for the dollar today would be the release of domestic retail sales figures for December.