The Australian dollar was slightly stronger this morning, as the market awaits minutes from the central bank's May monetary policy meeting.
The Australian dollar was slightly stronger this morning, as the market awaits minutes from the central bank's May monetary policy meeting.
At 0700 (AEST) on Tuesday, the Australian dollar was trading at 105.86 US cents, up from 105.79 cents at close on Monday. The currency reached 110.11 US cents earlier this month, its highest since the currency was floated in December 1983.
Since 1700 (AEST) on Monday, the local unit traded between 105.09 US cents and 106.42 US cents.
The domestic currency rallied overnight but lost some steam around 0100 (AEST), mainly on the back of losses in US equities, according to Kathy Lien, director of currency research at GFT Forex.
The market also was positioning itself ahead of the central bank releasing minutes of its May board meeting later on Tuesday, Ms Lien said.
The Reserve Bank of Australia decided to keep the cash rate unchanged at 4.75 per cent in its monetary policy meeting earlier this month.
"Even though the RBA has expressed some hawkishness in the past couple of weeks, when they last met, the comments weren't as optimistic," Ms Lien said.
Currency traders would be looking for any hints of rate rises from the RBA minutes, given the bank's recent stated concerns over the increase in price pressures, she said.
"But given the significant pull-back we've seen in commodity prices over the past week and a half, a lot of those concerns have been alleviated and that's part of the reason that the Australian dollar sold-off a bit."
Overnight (AEST), European finance ministers backed an EU-IMF bailout of Portugal amounting to 78 billion euros ($A104.45 billion).
Although this event was closely watched by investors, currency markets barely reacted to the news, Ms Lien said.
"The bail-out is good for the region and will certainly provide some support for Portugal, but I think Greece is the big problem right now and there's still no clear agreement on that."
She expected the Australian dollar to trade between 105 US cents and 106.25 US cents during the local session on Tuesday.
