Aussie Dollar Under Pressure as Fed Decision Looms

The Australian dollar has steadied around $0.71 as it holds its recent decline near a four-week low. This is due to the strengthening of the US dollar and higher Treasury yields, which are weighing on the currency.

Markets expect the Federal Reserve to raise interest rates by 25 basis points for the first time in around three years. The US 10-year Treasury yield has climbed above 5%, its highest level since 2007, as surging oil prices and persistent inflation concerns reinforce expectations of tighter policy.

The greenback is also being supported by fresh Houthi attacks on Saudi Arabia and the postponement of Gulf-Iran talks. These events have driven oil prices near a four-month peak above $105 a barrel.

The Reserve Bank of Australia's hawkish stance continues to provide some support, with markets pricing an 85% probability of a rate increase to 4.60% at its September 29 meeting.