The Australian dollar hit fresh 11-week lows against a broadly firmer US dollar on Tuesday as US yields jumped to four-month highs, crimping the local currency's interest rate advantage. The Aussie slipped to $0.8787, from $0.8870 late here on Monday, having earlier touched a $0.8764 trough. It has now lost over five cents from the months' high of $0.9326.
The broad-based rally in the US dollar was linked in part to growing speculation the US economy would revive more quickly than first feared and thus prompt an earlier increase in interest rates from the Federal Reserve. That sent US yields surging and narrowed the gap between Australian and US 10-year yields to its lowest in seven months at 188 basis points.