While Federal Reserve expectations are not likely to cut rates aggressively this year, the U.S. dollar hovered near a three-month peak.

After its February meeting, the Reserve Bank of Australia (RBA) on Tuesday left rates unchanged at 4.35%, their highest level in 12 years, as expected, but warned that a further increase in interest rates may be necessary for ma& here; to deal with inflation.

The Australian dollar rose by 0.44% to $0.65115 after the decision, moving away from the 2 and a half month low of $0.6469 that it hit on Monday. The New Zealand dollar was up 0.23% to $0.6069

In other currencies, the euro was little changed at $1.0750, while sterling reached $1.25495, up 0.11% on the day, but remained close to the seven-week low it hit on Monday. The fall in the British pound on Monday came despite some positive economic data. The figures showed that the unemployment rate was likely to be much lower at the end of last year than expected, which could also push back British rate cuts. The Japanese yen strengthened during the day to 148.44 per dollar, but it is not far from its two-month low of 148.90, which it