The Australian dollar has surged to its highest level in a month after the US Federal Reserve announced fresh measures to stimulate the country’s sluggish economy.

At 0700 AEST on Friday, the currency was trading at 105.48 US cents, up from 104.52 US cents on Thursday.

It rallied more than one US cent to 105.67 US cents, it’s highest level in a month, after the Fed announced an open-ended scheme to buy $40 billion worth of mortgage-backed securities a month.

The move is designed to lower long-term interest rates, which the Fed hopes will spur borrowing and spending.

In a statement, the Fed said it would continue purchasing bonds until the country’s flagging jobs market improved.

“If the outlook for the labour market does not improve substantially, the committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability,” it said.

LTG GoldRock director Andrew Barnett said the highly-anticipated move had excited markets and the Australian dollar was likely to remain strong for at least the next few days.

“The market wanted (the stimulus package) and it’s got it, so it’s excited,” he said.

“There isn’t a reason for the Aussie dollar to fall back at the moment.”

However, he said, the currency was likely to “top out” somewhere between its current level and 106.50 US cents before falling back.