The Australian dollar has continued trading within a narrow range ahead of the Reserve Bank of Australia's February cash rate decision.
At 1200 AEDT on Tuesday, the Australian dollar was trading at 87.39 US cents, down from 87.48 cents on Monday.
The RBA is widely expected to leave the cash rate on hold at 2.5 per cent when it meets for the first time this year on Tuesday.
Investors will be waiting for the RBA's statement at 1430 AEDT to garner information about which direction the cash rate is headed, Forex.com research analyst Chris Tedder said.
"The bank's accompanying statement will be closely scrutinised for the board's opinion on the December quarter's surprisingly strong inflation figures and the recent fall in the Aussie dollar," Mr Tedder said.
"Given the weakness in parts of the Australian economy and the need to prevent a rally in the Aussie, it's unlikely the RBA will completely remove its easing bias today.
"But we do suspect the overall tone of the statement will be more neutral than at prior meetings and the board may be more comfortable with the value of the Aussie after its recent fall.
"This could set the stage for some limited Australian dollar gains."
Meanwhile, Australian bond futures prices were higher.
At 1200 AEDT on Tuesday, the March 2014 10-year bond futures contract was trading at 96.110 (implying a yield of 3.890 per cent), up from 96.065 (3.935 per cent) on Monday.
The March 2014 three-year bond futures contract was at 97.170 (2.830 per cent), up from 97.130 (2.870 per cent).