KEY POINTS:
The Australian dollar has closed little change, despite advancing almost one US cent during afternoon trade on continuing US dollar weakness.
At 1700 AEDT, the Australian dollar was trading at US$0.6476/79, down marginally from Monday's close of US$0.6487/89.
During the day, the unit moved between a low of US$0.6392, reached at about 1130 AEDT, and a high of US$0.6485.
The Australian dollar opened weaker at US$0.6420/27 at 0700 AEDT, as a pessimism about the US banking sector dampened risk appetite and boosted safe-haven US dollar flows.
The unit continued to move lower during morning trade, but found support at US$0.6390 and rose steadily through the afternoon to its intraday high despite weak equity markets across Asia.
RBC Capital Markets senior currency strategist Sue Trinh said investors defied the recent trend of lower equity markets resulting in US dollar buying.
"Instead, the broad trend in Asian FX has been to sell the US dollar off, which has given the Aussie dollar a bid tone," Ms Trinh said.
"It's been a one-way street for the Aussie dollar."
The Australian share market finished at a five-year low on Tuesday, with bourses across Asia all trading lower.
At 1700 AEDT, the US dollar was down 2.5 per cent against Japanese yen compared with Monday's local close, while the euro had moved above US$1.2730, having dipped to US$1.2670 in mid-morning trade.
Despite the afternoon rally, the Australian dollar remained within a broad range of US$0.6350 and US$0.6500, where it has been for the past seven trading sessions.
While the moves of recent days were a break away from recent trading patterns, Ms Trinh said the overall trend for the Australian dollar was still one of weakness.
"Equities are lower because the global growth outlook is incredibly poor and in that environment a cyclical currency like the Aussie dollar does not perform well at all," Ms Trinh said.
US Federal Reserve chairman Ben Bernanke was scheduled to testify before the US senate during Tuesday night's (AEDT) offshore session.
In terms of US economic data, the S&P/Case-Shiller house price index for December was due for release, as well as a survey of consumer confidence for February.
CURRENCY TABLE
CURRENCY SPOT PREVIOUS CLOSE
AUD/USD 0.6476-79 0.6487-89
AUD/JPY 61.72-76 60.28-35
AUD/EUR 0.5081-89 0.5026-35
AUD/NZD 1.2618-32 1.2653-77
AUD/GBP 0.4443-52 0.4465-72
EUR/USD 1.2739-41 1.2895-98
USD/JPY 95.30-33 92.95-97
EUR/JPY 121.41-46 119.87-90
(*Closes taken at 1700 AEDT Previous local session)
At 1600 AEDT, the RBA's trade weighted index was at 54.4, which is where it finished on Monday.
- AAP