Australian Dollar Holds Ground

The Australian dollar held its recent gains near $0.70, after rebounding from a multi-month low hit on October 1, as weakness in the New Zealand dollar and euro supported demand for the currency. It got an indirect lift from euro selling, which pushed the single currency to its lowest level since late 2024, pressured by growing concerns over France’s fiscal position and political uncertainty, while the Aussie climbed to a six-day high against the kiwi. Domestically, consumer confidence weakened for a second straight month, with higher fuel and interest rates weighing on household sentiment, while steep house-price losses also weighed on sentiment. The Reserve Bank of Australia raised its cash rate to a 15-year high of 4.6% in September, its fourth hike this year, as it sought to curb inflationary pressures. However, easing oil prices and softer August inflation reduced expectations for further tightening, with markets pricing a November hold but another hike early next year.

The Australian dollar hovered below $0.70, trading near multi-month lows as a stronger US dollar and elevated Treasury yields continued to weigh on the currency. After posting its fourth consecutive weekly decline last week, the Aussie remained under pressure despite the Reserve Bank of Australia raising its cash rate to a 15-year high of 4.6% in September, as August inflation came below estimates, reducing bets on another rate increase in November. Meanwhile, the US dollar has remained firm, supported by elevated Treasury yields, which have enhanced the appeal of US assets, while a broad global selloff in government bonds has also fueled safe-haven demand for the greenback. A weaker-than-expected US jobs report provided some relief for the Aussie, as markets largely priced out the prospect of another Federal Reserve interest rate hike this month. Elsewhere, investors continued to monitor escalating Middle East tensions and the resulting inflation risks from higher oil prices.

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.