The Australian dollar is higher after weaker-than-expected national consumer price index figures and the International Monetary Fund (IMF) downgraded its economic forecast for Europe.
At 0700 AEDT on Thursday, the Australian dollar was at 105.50 US cents, up from Wednesday's close of 105.39 cents.
The local currency dipped slightly on Wednesday, after CPI for the December quarter rose only 0.2 per cent - lower than economists' predictions of a 0.5 per cent rise.
But HiFX senior trader Stuart Ive said the currency was well on the way to recovering overnight, after the market digested the data and its potential impact on Australia's central bank.
"I think it was really by-the-by, and will not change where the RBA (Reserve Bank of Australia) sits at the moment," he said.
The RBA will meet on February 5 for its monthly meeting and rate decision.
At its last meeting, in December, it cut the cash rate by a quarter of a percentage point to 3.00 per cent.
Later overnight, a downgrade to growth predictions for Europe pushed the Aussie dollar lower.
"One major event overnight was the downgrading of growth forecasts for Europe by the IMF," Mr Ive said.
"The Australian currency dipped a bit after that, but has now come off those lows."
The IMF said it expected the euro zone to remain in recession throughout 2013, with the region's economy expected to contract 0.2 per cent.
Looking ahead, Chinese manufacturing data due for release on Thursday could shift the Australian currency out of its range trading pattern, Mr Ive said.
"The Australian dollar has been in this 105.30 to 105.80 (US cent) range for last few days," he said.
"The key thing now will be the Chinese data this afternoon."
HSBC will release purchasing managers' index (PMI) data for January - with the previous result of 51.5 suggested the country's manufacturing sector was recovering.