SYDNEY The U.S. dollar was a touch softer in Asia on Wednesday, having retreated from a two-month high as markets awaited the outcome of the presidential election, while the Aussie dollar stood out with broad gains after interest rates at home were left steady.
The dollar index was last at 80.622, recoiling from Monday's high of 80.843 as the euro bounced back above $1.2800, from a near two-month trough around $1.2764.
Traders said the moves were mostly position adjustments as Americans head to the polls and markets grew hopeful the Greek parliament will approve the government's new austerity measures needed to secure aid from foreign lenders.
National opinion surveys showed Barack Obama and Mitt Romney in a virtual dead heat, although the Democratic incumbent has a slight advantage in several vital swing states.
Christopher Vecchio, Currency Analyst at DailyFX, said the market appeared to be positioned for an Obama victory.
"Attention will quickly shift to the European Central Bank meeting later this week, considering that Spain has continued to drag its feet with respect to a bailout. The EURUSD looks to be constrained by 1.2750 to the downside and 1.2900 to the upside until the ECB meets, barring unforeseen event risk."
Traders said the market would also start worrying about the U.S. fiscal cliff, following a resolution to the drawn-out race for the White House.
Against the yen, the dollar bought 80.36, having survived a brief dip below 80.00.
The Australian dollar was the best performing major currency on Tuesday, having climbed more than 0.7 percent to a 5-1/2 week high of $1.0447 after the Reserve Bank of Australia kept interest rates unchanged, but left the door ajar for more cuts.
Markets had been in two minds about an easing at the November 6 policy meeting, but were more certain of one early next year.
The break above $1.0400 has paved the way for the Aussie to test the September 28 high of $1.0474, followed by $1.0624 -- a peak set on September 14.
The Aussie hit six-month highs of 84.04 yen, while the euro slumped to a two-month low of A$1.2236.
Australia's employment data on Thursday will be the next flash point for Aussie-dollar bulls, followed on Friday by a raft of data on China, Australia's single biggest export market.
"Given that much of the domestic data in question is still showing some vulnerability, the exchange rate still high, and the outlook for the global economy is constrained, a cut might still be a reasonable bet in December," said Greg Gibbs, strategist at RBS.
"However, the timing of the next cut has become more data dependent."
(Editing by Wayne Cole)