The Australian dollar traded below $0.690, near a three-month low and headed for a heavy weekly loss as the greenback remained broadly firm on expectations of US interest rate hikes. The US dollar has rallied since the Federal Reserve adopted a surprisingly hawkish stance last week, prompting markets to price in a 75% chance of a rate hike as early as September. Meanwhile, expectations for additional tightening by the Reserve Bank of Australia have eased, despite a slight increase in underlying price pressures in May. Investors expect second-quarter inflation to fall short of the central bank’s 8% forecast, reinforcing bets that the RBA has already reached the peak of its tightening cycle. Markets priced in only about a 50% chance of another hike in the 4.35% cash rate, while some have started pricing in rate cuts in the second half of 2027. The Aussie is also on track for a second straight monthly loss, weighed down by recent Middle East tensions and a selloff in tech-related stocks.