US Dollar: Consolidation after treasury buybacks – DBS
DBS Group Research strategist Chang Wei Liang notes ongoing Dollar weakness after the US Treasury unexpectedly doubled long-dated bond buybacks, pushing DXY below 99.
DBS Group Research strategist Chang Wei Liang has observed a weakening of the US Dollar following the US Treasury's unexpected doubling of long-dated bond buybacks, which has pushed the DXY below 99. Liang emphasizes that the operation size is minimal and monetary policy remains unchanged, thus predicting USD consolidation rather than further declines.
Despite hawkish FOMC minutes having limited market impact, the USD has softened, reaching its weakest level since mid-May overnight. The US Treasury's surprise announcement of a minimally doubled buyback of long-dated bonds led to a drop in long end US yields and the USD, with the DXY easing below 99. While the additional buybacks are very small and there is no change in monetary policy, the USD is likely to stabilize today rather than continue its downward trend.
The FOMC meeting minutes released this morning indicate a hawkish stance at the Fed in the July meeting, but their influence on markets is comparatively minor.
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