The Australian dollar is higher after the US US dollar fell back from its strong gains made last week.
At 0700 AEDT on Tuesday, the Australian dollar was trading at 104.95 US cents, up from Monday's local close of 104.72 US cents.
During the overnight offshore session, the Australian dollar moved between a low of 104.68 US cents and a high of 105.13 US cents.
HiFX senior dealer Dan Bell said the US dollar came under selling pressure as market players reassessed the minutes from the US Federal Open Market Committee published last week.
"We are just seeing a reversal of the gains that we saw in the US dollar following the Fed minutes last week," Mr Bell said from Auckland.
"I think there was a little bit of an overreaction to those minutes where some were suggesting that quantitative easing (QE) might end this year.
"I think as markets have digested those minutes a little bit more, everyone has decided it doesn't not necessarily suggest we are going to see an end to QE this year."
The lack of liquidity on currency markets still trading in holiday conditions was also a factor in the Australian dollar's rise, Mr Bell said.
In economics news on Tuesday, the Australian Bureau of Statistics will publish the November trade balance.
But Mr Bell said he expected offshore factors to offer direction for the Australian dollar during Tuesday's local session.
"In general, I think we don't have enough reasons to be selling the Aussie dollar," Mr Bell said.
"In what is still a thin market, we are seeing the Aussie dollar continuing to hold up quite well with a bias to the upside."