The Australian dollar has crept a little higher against its severely weakened US counterpart.

At 0635 AEDT on Tuesday, the Australian dollar was worth 78.09 US cents, up from 78.03 US cents on Friday.

The US dollar has sunk to its lowest in three months and has seen its steepest annual fall since 2003 on concern there may not be a durable improvement in US economic growth following US tax cuts.

There is some expectation that the greenback could lag other major currencies further in 2018 with investors expecting other major central banks to reduce their stimulus while the Federal Reserve has signalled it will raise interest rates further, analysts say.

“The dollar will face more headwinds in 2018,” Reuters quoted Chris Gaffney, EverBank president of World Markets at in St Louis, Missouri as saying.

“The Federal Reserve won’t be going at it alone in terms of taking off more gas from the stimulus pedal.”

The Aussie dollar is unchanged against the yen but lower against the euro.

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