Dollar on back foot as US yields, crude prices dip; Aussie buoyed by hawkish RBA

According to Business Recorder, the greenback weakened further on Wednesday, having hit a three-week low in the prior session, as softer Treasury yields and crude prices dampened its appeal. The dollar index, which compares the currency with six peers, held at 101.78 after falling 0.2 per cent on Tuesday. Elsewhere, the Australian dollar stayed near a three-week high after Reserve Bank of Australia Deputy Governor Andrew Hauser, speaking at a Citi conference, said the inflation outlook had deteriorated significantly.

The Aussie gained 0.1 per cent to $0.7013, just beneath the previous session's high of $0.7017. Hauser also expressed uncertainty about whether another rate increase would be needed next month. Meanwhile, investors have been drawn to the dollar as a haven, given market swings linked to the Middle East war and the AI frenzy in equities.

Crude prices eased from a five-month peak as traders weighed a meeting between Iran's president and Pakistan's army chief, a US-Iran mediator, against Houthi strikes on Saudi infrastructure. Commonwealth Bank of Australia economist Carol Kong said dollar safe-haven demand could ease once energy prices fall and the Middle East fighting ends, though she expected a modest rise over the next few months as foreign money flows into US markets. From next Wednesday, the US Federal Reserve, European Central Bank and Bank of Japan will announce decisions on consecutive days, and traders do not expect rate changes.