The Australian dollar rallied to its highest level in almost six weeks after the Reserve Bank of Australia opted to keep the cash rate on hold for November.
At 1700 AEDT on Tuesday, the Australian dollar was trading at 104.27 US cents, up from 103.68 cents on Monday.
It rose to 104.37 US cents, its highest point since September 27, following the RBA's decision to keep the cash rate on hold at 3.25 per cent for November.
Commonwealth Bank currency strategist Joseph Capurso said futures markets had priced in a 50-50 chance of an interest rate cut on Tuesday, and the RBA's decision boosted demand for the currency.
"The market was finely balanced ahead of the decision so the Aussie rocketed higher," he said.
Mr Capurso said the Australian dollar could rally to around 104.50 US cents overnight but could fall depending on the outcome of US elections on Wednesday.
He said a clear victory by either President Barack Obama or Republican challenger Mitt Romney, along with wins in Congress for their respective parties would be good news for the currency.
"If it's a pretty clear victory for one party or another then it will probably be good for the Aussie dollar," he said.
"But if it is not clear cut then you might see the US dollar lift, pushing the Aussie dollar down."