The Australian dollar is back above 94 US cents, on the back of strong US retail data.
At 0700 AEST on Tuesday, the local unit was trading at 94.23 US cents, up from 93.86 cents on Monday.
US retail spending rose 1.1 per cent in March, the largest monthly gain in 18 months.
BK Asset Management managing director Kathy Lien said the US dollar had a weak reaction to the retail data, which helped support the Australian dollar.
“After a one-day respite, the Australian dollar resumed its rise against all major currencies.
“There was no Australian economic data released (on Monday) but the lack of upside momentum in the greenback helped to fuel the rally.
“Today’s stronger-than-expected US retail sales report should have been overwhelmingly positive for the greenback and while we did see the dollar appreciate against the euro, it held steady against the Japanese yen and other major currencies after the release.”
The focus for financial markets on Tuesday will be the release of the minutes of the Reserve Bank of Australia’s April board meeting.
Ms Lien said she expects the minutes to be a positive for the Australian dollar, based on the short statement released after the meeting on April 1.
“The RBA did not mention that the exchange rate was uncomfortably high and instead described it as only high by historical standards which investors interpreted as positive for the currency,” she said.
“As long as this tone is maintained in the minutes, the Australian dollar could make another run for fresh five-month highs versus the US dollar.”
Investors are gaining confidence about a revival in the Australian economy as recent indicators such as gross domestic product beat expectations.
“Recent communication from the RBA has been relatively more upbeat with Governor (Glenn) Stevens suggesting a fair degree of optimism over the handover of growth from mining to other sectors of the economy,” ANZ Bank said.
Traders will be looking for insights into the bank’s view on whether recent strength in the Australian dollar will hamper the economy’s ability to achieve more balanced growth, and whether it has any concerns about the housing market, ANZ said.
The US dollar moved higher against other major currencies after an encouraging US retail sales report and hints of more stimulus in the pipeline from the European Central Bank.
Around 2100 GMT (0800 AEDT) the euro bought $US1.3820, down from $US1.3883 late on Friday.
The US dollar also rose against the Japanese currency, to 101.82 yen from 101.59 yen. The euro fell to 140.74 yen from 141.13.
“A tug of war is shaping up in the EUR/USD with jawboning by European policy makers putting downside pressure on the pair and the recent decline in US yields providing upside support,” Lien said.
The US dollar rose to 0.8796 Swiss francs from 0.8752 late on Friday.
The greenback also gained slightly against the British pound, which slipped to $US1.6726 from $US1.6729.