The Australian dollar has surged to a fresh eight-month high overnight, as the US dollar tanked in response to the prospect of fewer interest rate rises by the Federal Reserve this year.

Key points: Australian dollar breaks 76.5 US cents

Australian dollar breaks 76.5 US cents Dow Jones Industrial Average gains 0.9 per cent, now up for 2016

Dow Jones Industrial Average gains 0.9 per cent, now up for 2016 West Texas crude oil cracks $US40 a barrel

The local currency also gained after jobs figures yesterday showed a lower-than-expected Australian unemployment rate of 5.8 per cent.

The Australian dollar hit 76.56 US cents, to reach a level not seen since July 2015.

At 7:30am (AEDT) it was buying 76.41 US cents.

On the cross-rates, it was worth 67.51 euro cents, 52.77 British pence, 85.15 Japanese yen and $NZ1.117.

While the greenback headed south, markets in the United States added value and crude oil prices strengthened.

"The US dollar capitulation in the wake of the unexpectedly dovish FOMC [Federal Open Market Committee] release yesterday has seen commodity prices surge overnight," observed IG market analyst Angus Nicholson.

"This dollar weakness has helped the US dollar-denominated pricing of iron ore, which gained 4.7 per cent overnight. WTI [West Texas intermediate] oil is back above $US40 for the first time since 7 December, fuelled by the dovish Fed, but also the positive DOE [Department of Energy] weekly release and expectations for the oil producer meeting in mid-April."

The Fed's lowering of expectations for the number of interest rate increases was welcomed by investors, who are concerned about the impact rising rates could have on the US economy.

In corporate news, FedEx forecast better-than-expected full-year earnings, sending its share price more than 10 per cent higher.

The Dow Jones Industrial Average pushed back into positive territory for the year, rising 0.9 per cent to 17,481.

The S&P 500 gained 0.7 per cent to 2,040 and the Nasdaq added 0.2 per cent to 4,774.

Several eurozone markets lost value overnight, in response to the Fed's soft tone on future interest rate hikes.

However, stocks in London rose by 0.4 per cent to 6,201, after the Bank of England kept its key interest rate on hold at 0.5 per cent.

Local shares were expected to rise today, with the ASX SPI 200 up 0.5 per cent to 5,194.

West Texas crude oil had increased to $US40.12 a barrel, a barrel of Tapis was higher at $US41.78 and spot gold had edged lower to $US1,256.77 an ounce.