On Monday morning, the unit reached 110.10 US cents, its highest level since the currency was floated in December 1983.
Its low since 0700 AEST on Monday was 109.32 US cents. At 1200 (AEST), the local unit was trading at 109.62 US cents, up from Friday's local close of 109.10 cents.
On Monday morning, Moody's Investors Service reaffirmed Australia's Aaa rating, citing the high economic resilience and government financial strength.
Moody's said the country's economic resilience was demonstrated during the global financial crisis, when it outperformed major Aaa-rated countries on a number of indicators.
CMC markets currency strategist Tim Waterer said the comments from Moody's were the main factor driving the Australian dollar past 110 US cents.
He said it was a stark contrast that the US had its credit rating outlook downgraded from stable to negative early in April.
"That further enhanced the Aussie dollar's appeal," Mr Waterer said.
"It didn't stay up there for that long because we had a number of 'take profit' orders getting triggered.
"That caused a bit of selling pressure and it fell below that level fairly quickly."
Mr Waterer said the Australian stock market, which was down over half of one per cent on Monday morning, was weighing on the Australian dollar for the moment, but he expected that pressure to be brief.
On Tuesday, the board of the Reserve Bank of Australia (RBA) meets and is widely expected to keep its cash rate unchanged at 4.75 per cent.
However, 11 out of 13 economists surveyed by AAP expect the central bank to raise the rate in the September quarter.
"There is a chance the RBA may have its hand forced in the second half of this year in terms of raising the rate.
"Traders will be looking at the statement fairly closely to see how much the rhetoric changes towards being more hawkish in nature." Mr Waterer said he expected the Australian dollar to trade in a range between 109.20 US cents and 109.90 cents on Monday afternoon, with a chance of reaching 110.50 during the offshore session on Monday night (AEST).
Meanwhile, the Australian bond market was flat to weaker at noon. At 1200 AEST, the June 10-year bond futures contract was trading level with its Friday close of 94.560 (5.440 per cent). The June three-year bond futures contract was at 94.860 (5.140 per cent), down from 94.890 (5.150 per cent).
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