The Aussie dollar continued to lead currency markets in the European session by strengthening to a 5-month high against the greenback.
This follows a surprise reading in Australia's annual consumer inflation data which jumped to a new 33-year high in the fourth quarter to 7.8%.
As a result, investors expect a higher interest rate hike from the Reserve Bank of Australia (RBA) at its meeting on February 7.
While most other major currencies did not show much change, including the US dollar which continued to move flat.
The dollar index, which measures the greenback's strength against a basket of major currencies, traded hovering around lows below 102.00.
The euro rose slightly after data from the German Ifo survey's business climate index showed a moderate increase in January.
Ifo economist Klaus Wohlrabe expressed his optimistic view that a recession will not occur in Europe even though the economy is expected to contract slightly in the first quarter.
Turning to pound trading, the currency traded flat after stabilizing following a fall on the back of dismal UK services and manufacturing data.
Market focus next shifts to the Bank of Canada (BOC) policy meeting that will take place in the New York session, where the central bank is expected to raise rates by 25 basis points.
The Canadian dollar traded steady at a one-month high against the US dollar ahead of the meeting.
