Investing.com - The Australian dollar rose against its U.S. counterpart on Tuesday, after the Reserve Bank of Australia reiterated that interest rates will remain on hold for an extended period of time.
AUD/USD hit 0.8735 during late Asian trade, the session high; the pair subsequently consolidated at 0.8728, rising 0.26%.
The pair was likely to find support at 0.8647, the low of November 14 and resistance at 0.8794, Monday's high.
The minutes of the RBA's November policy meeting showed that the bank intends to keep interest rates a record lows, in order to support growth.
The Australian dollar's gains were limited however, as the central bank also said that the nation's currency remains overvalued.
"Growth is still expected to be below trend over 2014-15, before gradually picking up," the RBA added.
Meanwhile, demand for the safe-haven greenback remained supported after data on Monday data showed that Japan’s economy contracted by an annualized 1.6% in the third quarter, compared to forecasts for growth of 2.5%.
Investors were also cautious as Japan Prime Minister Shinzo Abe was expected to announce later Tuesday that a sales-tax increase due to come into effect next year would be delayed and to call for elections to be held next month.
The Aussie was fractionally lower against the euro, with EUR/AUD edging up 0.09%, to 1.4310.
Later in the day, the U.S. was to release data on producer price inflation.