The Australian dollar rose to its highest level against its American counterpart in more than two weeks following better than expected domestic growth data.

At 1700 AEST on Wednesday, the Australian dollar was trading at 98.48 US cents, up from 97.82 cents on Tuesday.

During intraday trade the currency rose to 98.63 US cents, its highest level since May 22.

The economy grew by 1.3 per cent in the first three months of 2012, more than twice the rate economists expected, official data showed.

ForexCT head of research Steven Dooley said the surprisingly strong gross domestic product (GDP) result boosted demand for the Australian dollar.

“Everyone got blown of their chair today by those GDP numbers,” he said.

Mr Dooley said the local currency began to move higher early on Wednesday after a Wall Street Journal article suggested the US Federal Reserve was considering a third round of quantitative easing to stimulate the American economy,

Mr Dooley said the Australian dollar had lifted more than two US cents since the beginning of the month when it fell to a seven-month low of 95.82 US cents on June 1 on weak US non-farm payroll data at the time.

“Markets have turned around a little bit since those non-farm payroll numbers and have been getting a bit excited possible quantitative easing in the US,” Mr Dooley said.

He said the local currency was likely to continue to rise over the coming days but was likely to stall before reaching parity with its US counterpart.

“Short of a move by the US Fed or the ECB (European Central Bank) or some sort of co-ordinated central bank action, we would expect this move higher in the Aussie to wear itself out around 99 to 99.5 US cents and then head lower.”