AUD rises to fresh 10-year high above 81 cents

The Australian dollar rose above 81 cents for the first time in 10 years against a broadly weaker U.S. currency, which was on the defensive after another fall in new home sales in the world's biggest economy.

Underpinning the Aussie was speculation Australia's central bank will increase interest rates by a quarter of a percentage point to 6.50 % as early as next week, which would widen the official rate differential with the U.S.

AUDUSD opened at 81.00 and was traded between 80.83 and 81.06.

Fed's Moskow says inflation still biggest U.S. worry

High inflation remains a bigger concern for the United States than slower economic growth, Chicago Fed President Michael Moskow said in Beijing.

"My assessment is that the risk of inflation remaining too high is greater than the risk of growth falling too low," Moskow said in a speech prepared for delivery to a Central Party School on Tuesday morning, local time.

But Moskow, a voting member of the Federal Open Market Committee this year, seemed to temper his regular threat of more interest rate increases.

Moskow omitted a comment from his recent speeches on the economy that "some additional firming of policy may yet be necessary to address this inflation risk."