The Australian dollar hovered close to its highest level of the year on Tuesday, with the central bank set to hold policy steady later and traders focused on any hints of potential near-term easing.

The Australian dollar hovered close to its highest level of the year on Tuesday, with the central bank set to hold policy steady later and traders focused on any hints of potential near-term easing.

The yen idled in the middle of its range against the U.S. dollar this month ahead of a speech by Bank of Japan Governor Kazuo Ueda that could provide more clues about the pace of interest rate hikes, after the central bank left policy unchanged last week and signaled no rush to tighten further.

The euro attempted to find its feet following a nearly 0.5% tumble overnight as weak business activity surveys pointed to additional rate cuts, while sterling tracked close to a 2-1/2-year peak with the Bank of England last week striking a much less dovish posture than the Federal Reserve or European Central Bank.

The Aussie edged down 0.1% to $0.68305 as of 0007 GMT, after it jumped 0.45% in the previous session and touched $0.6853 for the first time since Dec. 28.

The RBA is widely expected to keep rates steady on Tuesday, but economists and traders have taken opposing views of the potential for lower rates later this year. Of 44 economists polled by Reuters, only four predict a reduction by end-December, whereas traders put the odds at roughly 60% for a cut.

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