At 0700 AEST on Wednesday, the local currency was trading at 77.06 US cents, up from 76.95 cents on Tuesday.
The Australian dollar took a hit on Tuesday after the Reserve Bank made it clear that another rate cut remains on the cards – both in the minutes of its April board meeting and in a speech by governor Glenn Stevens in New York.
But it managed to regain some ground overnight, rallying as high as 77.54 US cents before dropping back, amid volatile commodity prices.
“Markets were quiet overnight with no major news to drive proceedings,” Westpac senior market strategist in Wellington, Imre Speizer, said.
“Commodities were more volatile, with Brent crude falling 2.1 per cent and iron ore down 1.0 per cent.”
It could be a big day for the local currency with the release of official inflation figures at 1130 AEST which will inform the central bank ahead of its May board meeting.
The consumer price index (CPI) is expected to come in at 0.2 per cent in the March quarter for an annual rate of 1.3 per cent, according to an AAP survey of 15 economists.