RBA Rate Hike Expected as Aussie Dollar Weakened Against Greenback

The Australian dollar weakened against the U.S. dollar in Asian trading on Monday, hovering near 0.7010. This came as hawkish signals from the Federal Reserve and rising U.S. Treasury yields bolstered the greenback.

Hawkish remarks from Harker and Powell pushed market expectations for a rate hike in October to 65.9%. Cleveland Fed President Loretta Mester expressed concern that persistently high inflation could lead the American public to view elevated prices as the new normal, with Philadelphia Fed President Powell stating 'some moderate further tightening may be warranted.'

The Reserve Bank of Australia is set to raise rates by 25 basis points to 4.60% on Tuesday, the highest level since November 2011. The focus will be on whether Governor Lowe's press conference signals another back-to-back rate hike in November.