Feb 6 Reuters The U.S. dollar was slightly lower on Tuesday, but still within striking distance of its threemonth high, while the Australian dollar rose after the central bank said a rate hike may be needed to tame inflation.

The Reserve Bank of Australia RBA on Tuesday left rates unchanged, but cautioned about a possible further monetary tightening.

Investors have steadily pushed back bets for the first rate cut from the RBA to August, rather than June, with economists polled by Reuters also expecting the central bank to stay steady on rates well into the second half of this year.

The Aussie rose 0.35 to 0.6505, inching away from the 212 month low of 0.6469 it touched on Monday. The New Zealand dollar was 0.13 higher at 0.6063.

The repricing of the RBA monetary path helps to provide modest support for the Australian dollar in the nearterm, said Lee Hardman, senior currency analyst, at MUFG.

Sentiment towards the Aussie has also been boosted indirectly overnight by the rebound in the Chinese equity market where speculation is building over further state policy action to provide stability, he added.

The Aussie dollar is usually strongly correlated to Chinese stocks, as China is Australia39;s largest trading partner.

Chinese stocks recorded their biggest oneday gain since 2022 on Tuesday and the yuan rose on a slew of signals that authorities are strengthening their resolve to support slumping markets.

A string of robust U.S. economic data and remarks from Federal…