Australian dollar tops $0.71 amid US dollar weakness

The Australian dollar rose above $0.71, hitting an eleven-week high and on track for a fourth consecutive weekly advance, as broad weakness in the US dollar outweighed signs of softening in the domestic labor market.

The greenback remained under pressure as investors questioned whether the Treasury’s decision to double purchases of longer-dated debt could provide lasting relief, prompting a rebound in US Treasury yields and reinforcing concerns over the country’s widening fiscal deficit and heavy debt burden.

The weaker dollar more than offset pressure from softer Australian labor data, which showed employment fell in June and unemployment climbed to a near five-year high of 4.5%.

Still, the data was not considered weak enough to fully eliminate expectations for further RBA tightening, with markets pricing around a 70% chance of a rate hike to 4.60% by early next year.

Also, a diplomatic deadlock in the Middle East kept oil prices higher and inflationary risks elevated.