The Australian currency eased from one-month highs on Tuesday following the decision by two Independent MPs to back Labor to form a minority government.

At 1700 AEST, the local dollar was changing hands at $US0.9142/45, down from Monday's finish of $US0.9169/71.

Since opening, it traded between $US0.9179 and $US0.9118.

Investors were uncertain about the market's direction in the lead-up to the decision by Independent MPs Rob Oakeshott and Tony Windsor to back a minority Labor government, according to HiFX senior consultant Derek Mumford.

The announcement at about 1530 AEST ended 17 days of uncertainty.

Some investors had favoured the conservative opposition as it opposed the planned 30 per cent mining tax.

But since both parties have pledged to be fiscally prudent, dealers quickly brushed aside politics and the local unit recovered in late trade, assisted by earlier upbeat remarks from the Reserve Bank of Australia (RBA).

During the trading day the central bank announced a steady cash rate of 4.5 per cent for the fourth consecutive month.

Mr Mumford said the RBA's decision to hold rates steady did not affect the Aussie because it had been widely expected.

However, the central bank's statement suggest "the next move in the cash rate, whenever that may be, will be up," said Roland Randall, an analyst at TD Securities.

"This is not a 'neutral' stance, rather the RBA retains a tightening bias but has chosen to pause its policy tightening programme pending macroeconomic developments at home and abroad."