Australia’s dollar rose, trading 0.2 per cent from its highest level in more than a week as gains in commodity prices boosted demand for the currency.

The dollar strengthened versus most of its 16 major counterparts this week after prices for iron ore climbed to the most in more than two months.

A report yesterday showed claims for jobless benefits in the US fell to the least since February 2008, buoying risk appetite.

Data today may show confidence in the world’s biggest economy stayed near the strongest level since May.

‘‘Iron ore prices have improved,’’ said Hans Kunnen, chief economist at St. George Bank in Sydney. ‘‘The labor market may be picking up a touch in the US. It’s positive for the Aussie and it’s positive for risk.’’

The dollar added 0.1 per cent to $1.0271 in Sydney this afternoon, from $1.0264 yesterday, when it reached $1.0294, the highest since October 2. It has climbed 0.8 per cent this week.

Australia’s 10-year bond yield rose one basis point, or 0.01 percentage point, to 3.04 per cent and is little changed since last week. The MSCI Asia Pacific Index of shares added 0.5 pe cent.

The Thomson Reuters/Jefferies CRB Index of raw materials rose 0.6 per cent yesterday. Physical iron ore with 62 per cent content at the Chinese port of Tianjin advanced to $117.70 a ton on Wednesday, the highest close since July 25, according to The Steel Index. China is Australia’s largest trading partner .

Further declines in the Australian dollar may be curbed as the scale of central bank rate cuts priced in by traders of overnight index swaps is now in ‘‘overshoot territory,’’ according to Royal Bank of Canada.

‘‘With so much negative news already in the price, we see downside in the Australian dollar limited from current levels,’’ Sue Trinh, a Hong Kong-based senior currency strategist at RBC, wrote in a report today.

Blooomberg