Aussie Dollar Struggles Amid US Rate Hikes and Economic Strength

The Australian dollar is experiencing its fourth consecutive week of losses despite a significant interest rate hike by the Reserve Bank of Australia in September. The Aussie remains below $0.70, near multi-month lows as the US dollar continues to strengthen on rising US Treasury yields.

Investors are becoming less optimistic about further tightening measures from the RBA, with markets pricing a 22% chance of an October rate hike and 38% for December. This reduced expectation is partly due to a sharp downturn in the housing market and a steady rise in unemployment.

The US dollar's strength is also attributed to robust economic data, elevated Treasury yields, and heightened Middle East geopolitical uncertainty. Meanwhile, higher US yields have narrowed the yield premium on Australian debt to its smallest in a year, reducing support for the Aussie.

The currency drew some indirect support from a weaker euro amid concerns over French debt, but this was not enough to offset the overall negative sentiment towards the Australian dollar.