The local currency has gained further against its American counterpart after hitting a 26-month low against it - but the little Aussie battler remains vulnerable ahead of two key risk events, analysts say.
The Australian dollar was buying 62.22 US cents late Monday afternoon, from 62.16 US cents at Friday's close of business.
The Aussie breached 62 US cents for the first time since October 2022 during the new year's holiday, although NAB head of FX strategy Ray Attrill said this was due to end-of-year price action and was not news related.
Still, the Aussie is down almost 10 per cent since the end of September, mostly due to gains by the greenback after Donald Trump's victory, which markets anticipated in advance.
The local share market finished marginally higher on Monday, its third straight day of gains.
The benchmark S&P/ASX200 index rose 6.9 points, or 0.08 per cent, to 8,257.4, while the broader All Ordinaries gained 4.6 points, or 0.05 per cent, to 8,516.5.
Brown Brothers Harriman head of currency trading Win Thin said the Aussie could see further slides as markets ramped up bets for a February rate cut.
The interest rate market's implied odds of a February 18 cut has been just over 70 per cent in recent days, up from more than 50 per cent in December.
A consumer price index readout for November due to be released on Wednesday would be important in setting the direction of the Aussie, Dr Thin said.
Also, minutes from the Federal Reserve's last meeting will be released on Wednesday and will be closely watched.
The Fed cut US interest rates on December 19 but pivoted to a more hawkish stance and indicated there would be fewer rate cuts in 2025 than previously forecast, leading to a big drop for both the Aussie and the ASX200.
In morning trading on Monday, the ASX200 rose as many as 41 points, reaching its highest point since that December 19 plunge, but most of the gains faded in the afternoon.
Six of the ASX's 11 sectors finished higher and three closed lower, with the consumer discretionary and utilities sectors basically flat.
Materials/mining was the biggest mover, falling 1.4 per cent as Rio Tinto dipped 1.7 per cent to $115.44 and BHP and Fortescue both retreated 2.0 per cent, to $38.98 and $18.05, respectively.
Goldminers were mixed as the precious metal changed hands for $US2,634 an ounce, with Newmont dropping 2.0 per cent, Evolution flat and De Grey up 0.3 per cent.
Also, Bellevue Gold plunged 14.0 per cent to a nearly two-year low of 98.50 cents after revising its 2024/25 production guidance.
In the financial sector, Insignia Financial soared 14.7 per cent to a three-year high of $4.06 after the financial advice company formerly known as IOOF Holdings said it had received another takeover offer.
US-based investment manager CC Capital Partners is offering $4.30 per share for the money manager, a $2.9 billion proposal that eclipses a recent $4-per-share, $2.7 billion offer from Bain Capital.
Insignia's board is considering both proposals.
Elsewhere in the sector, the big four banks were mostly higher, although ANZ dipped 0.1 per cent to $28.84.
NAB rose 0.8 per cent to $37.83, CBA added 0.6 per cent to $156.02 and Westpac gained 0.2 per cent to $32.70.
In the energy sector, there were more gains for uranium developers after a major mine in Kazakhstan suspended production on January 1 over a permitting issue.
Deep Yellow, Paladin Energy, Bannerman Energy and Alligator Energy all rose between 5.1 and 5.9 per cent.
ON THE ASX:
* The benchmark S&P/ASX200 index on Monday gained 6.9 points, or 0.08 per cent, to 8,257.4
* The broader All Ordinaries rose 4.6 points, or 0.05 per cent, at 8,516.5
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 62.28 US cents, from 62.16 US cents at Friday's ASX close
* 98.23 Japanese yen, from 97.81 Japanese yen
* 60.41 euro cents, from 60.55 euro cents
* 50.07 British pence, from 50.17 pence
* 110.73 NZ cents, from 110.87 NZ cents
