The Australian dollar was slightly higher amid speculation the US central bank could embark on another stimulus program to help the US economy.

At 0700 (AEST) on Thursday, the Australian dollar was trading at 107.56 US cents, up from 107.39 cents at close on Wednesday.

Since 1700 (AEST) on Wednesday, the local unit traded between 106.80 US cents and 107.86 cents.

In past week, there has been a raft of weak economic data from the US, raising fears about recovery there.

As well, the US government is about to cut spending, part of the deal made by politicians to raise the the US debt ceiling, but could be a further drag on economic growth.

Overnight, a report from the Wall Street Journal quoted three former senior Fed Reserve officials who said another round of stimulus would be a topic of discussion at Tuesday night’s (AEST) Federal Open Market Committee (FOMC) meeting.

Westpac New Zealand senior market strategist Imre Speizer said the Australian dollar stabilised overnight after two days of falls.

“The thing that is probably in the spotlight now is next week’s FOMC meeting… that they might flag further stimulus,” Mr Speizer said from Auckland.

“US equity markets finished a little higher and that’s holding up the Aussie, not pushing it too much higher but it’s preventing it from falling.”

Another factor that helped the Australian dollar overnight was the Swiss central bank cutting its interest rate to zero.

“That weakened the Swiss franc against the other currencies, so that was a positive for the Aussie and for risk sentiment,” Mr Speizer said.

He expected the Australian dollar to trade between 106.80 US cents and 108.00 cent on Thursday.