The Aussie jumped on Tuesday after the Australian central bank held
steady at a record low 2%.
Few economists expected the RBA to leave the cash rate unchanged at 2.0% with the market pricing in a 44% possibility of a 25 basis points cut.
Governor Glenn Stevens said in a statement that the Board considered that prospects for improvement in the economy have strengthened over recent months and leaving the rate unchanged was an appropriate decision.
"Members also observed that the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand."
AUD/USD last traded up 0.72% to settle at 0.7198, while NZD/USD dipped 0.01% to 0.6745.
USD/JPY declined 0.07% to trade at 120.68.
Overnight, the dollar remained lower versus the other major currencies on Monday, after official numbers showed that manufacturing activity in the U.S. grew at the slowest pace in more than two years in October.
The Institute for Supply Management said its national manufacturing
index slipped to 50.1 this month from a reading of 50.2 in September. A
reading above 50 signals expansion in the manufacturing sector. New
orders climbed to 52.9 from 50.1 in September. However, the employment gauge fell to 47.6, the lowest reading since August 2009. It was the
first time it had dropped below 50 since April.
Manufacturing, which accounts for 12% of the U.S. economy, has also been slammed by business efforts to reduce an inventory overhang and slowing demand overseas.
Investors were turning their attention to Friday U.S. nonfarm payrolls report for indications on the likelihood of a December rate liftoff.
