Aussie Dollar Heads for 4th Weekly Loss

The Australian dollar was little changed below $0.70, near multi-month lows as the greenback extended its bull run on surging US Treasury yields. The Aussie is heading for a fourth straight week of losses despite the Reserve Bank of Australia raising its cash rate to a 15-year high of 4.6% in September, as investors saw limited scope for further tightening while policymakers assess the impact of previous hikes. A sharp downturn in the housing market and a steady rise in unemployment have further reduced expectations for another rate increase, with markets pricing a 22% chance of an October hike and 38% for December. Meanwhile, the US dollar remained broadly stronger on robust economic data, elevated Treasury yields and heightened Middle East geopolitical uncertainty. Higher US yields have narrowed the yield premium on Australian debt to its smallest in a year, reducing support for the currency. The Aussie drew some indirect support from a weaker euro amid concerns over French debt.

The Australian dollar weakened to around $0.69, hitting an eleven-week low as the US dollar strengthened on surging Treasury yields, while investors trimmed bets on another near-term RBA rate hike. Markets reduced the odds of another RBA rate increase in November to 20% from 36% previously after August inflation came in slightly below forecasts. The next hike is now seen more likely in March rather than February. Australia's trade data also weighed on sentiment as the trade surplus narrowed to its smallest in three months. Meanwhile, the Aussie finished 3.1% lower last month, partly due to a broadly stronger US dollar and ongoing Middle East tensions. The dollar index climbed to an almost 18-month high despite reduced expectations of another Fed hike this month, as Treasury yields surged to multi-decade peaks on concerns over persistent energy-driven inflation. Oil prices remain elevated as the US and Iran make little progress in talks, despite signs of a recovery in Middle East flows.

AUDUSD decreased to 0.69, the lowest since July 2026. Over the past 4 weeks, Australian Dollar US Dollar lost 3.06%, and in the last 12 months, it increased 5.05%.