Ahead of the central bank’s decision, the Australian dollar was over a third of a US cent trading at 107.13 US cents down by 40 US cents from Monday’s 107.53 US cents.

Kathy Lien, GFT Forex director of currency research, accounted that the Australian dollar showed resilience during the overnight session.
The market remains concerned until now about poor US employment figures released on Friday. It showed employers had hired only 54,000 new workers in May − the fewest in eight months and one quarter of the February-April pace, Lien explained.

"We're seeing continuation of risk-aversion... following Friday's payrolls report. As a result, we're seeing weakness across the board today and the Aussie is actually the only high-yielding currency that is unchanged or up against the US dollar," Lien furthered.

At 2.30pm AEST, Lien reports the local unit was keeping steady ahead of the Reserve Bank of Australia's (RBA) board meeting and decision on interest rates.

"I think that the resilience of the Aussie is a reflection of the hope that investors have for some positive and optimistic comments from the RBA today. The RBA is expected to overlook all of the disappointments we've had in manufacturing and GDP (gross domestic product) and is expected to emphasise the strength of the rebound that could occur in the second quarter,” says the director.

Her short research showed the domestic currency could trade as low as 106.50 US cents during the local session and said it may test 108 US cents. This is possible only if RBA will be aggressive in the statement accompanying its monetary policy decision.