The Australian dollar has edged lower as the US dollar firms against the pound, buying 71.92 US cents down from 72.17 US cents on Monday.

The local currency yesterday has recouped some losses on its US counterpart as speculation the Federal Reserve might almost be done hiking rates undermined the greenback’s yield advantage.

The Aussie had hit a four-week trough at 71.70 US cents on Monday after disappointing Chinese trade data over the weekend showed import growth slowed sharply.

That fuelled concerns about the Sino-US trade dispute amid the Huawei furore.

Yet the Aussie edged back up to 72.18 and the US dollar came under broad pressure as investors scaled back expectations on rate hikes following Friday’s softer reading on November payrolls.

Markets have gone from pricing in three rate rises next year to less than one, while 10-year Treasury yields have dived 40 basis points in just a month.

“The US dollar is under the shadow of any resolution to the ongoing trade disputes, increasingly dovish Fed language, and slowing global growth – that set of factors has created a wall of worry offshore,” said Kiwi Bank chief economist Jarrod Kerr.

“In summary this is a USD story.”