The Australian dollar rose following a second straight day of gains across global equity markets on expectations of an imminent solution to Europe’s debt crisis.

HiFX senior trader Stuart Ive said risk sentiment was firmly back on overnight.

“We saw a good recovery in the commodity and stock markets globally on the hope of Europe actually piecing together some formula to getting them a solution to their debt problems,” Mr Ive said.

The Greek parliament on Tuesday (European time) approved a controversial property tax aimed at plugging a budget hole and help unlock bailout funds needed to prevent the country from defaulting.

The euro climbed against the US dollar as Greek Prime Minister George Papandreou insisted Greeks were making a “superhuman” effort to keep on top of the crisis and German Chancellor Angela Merkel said cutting debt was the only way forward.

At 0700 (AEST), the Australian dollar was trading at 99.10 US cents, up from 98.65 cents on Tuesday.

The currency lost some of its momentum towards the end of the US session, following a late fall in the Dow Jones Industrial Average, Mr Ive said.

“We dropped a good 40 points fairly quickly.”

Currency traders were now focused on Thursday, when Germany’s parliament is due to vote on giving more powers to the EU’s bailout fund.

“A lot of buyers are looking at that. Not that it’s expected to fail but purely because it is expected to reflect Merkel’s losing grip on the Coalition within the German parliament.”

No major local economic data was due for release on Wednesday.

Mr Ive said he expected the Australian dollar to trade between 98.90 US cents and parity on Wednesday.

Since 1700 (AEST) on Tuesday, the local unit has traded between 98.47 US cents and 99.85 US cents.