The Australian dollar was half a US cent higher after the US dollar lost ground against the euro and the yen in overnight trade.
At 6.30am AEDT the local unit was trading at 103.05 US cents, up from 102.55 cents at yesterday’s local close.
Yesterday the Aussie hit its lowest level since October in thin trading due to the Lunar New Year.
There were few local triggers for the selloff and analysts pinned the move on views that the Reserve Bank of Australia may again have to cut rates in the coming months, citing recent dovish commentary from the bank.
"The Aussie dollar has continued to take a hammering on the dovish assessment the RBA made in its recent statement. Moderate inflation pressures and soft labour market conditions are giving room for further easing," said Ben Taylor, trader at CMC Markets.
"Today's confidence and conditions both improved from a low base, however weakening employment conditions added downward pressure to the Australian dollar," he said.
National Australia Bank's business confidence index rose by one point from December to an index reading of +3 points. A separate index of business conditions--which tracks goods orders, employment and profitability--improved to a reading of minus 2 in January from minus 5 in December, NAB said yesterday.
At 5.24pm AEDT yesterday the Aussie was trading at 102.52 US cents, down from 102.99 US cents at Monday’s close.
