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. However, he stresses the operation size is small and monetary policy unchanged, so he expects USD consolidation rather than further declines today, despite hawkish FOMC minutes having limited market impact.

Treasury buybacks drive usd softness

"USD softening continues, as the dollar fell to its weakest level since mid-May overnight."

"The US Treasury surprised markets by announcing plans to minimally double buybacks of long-dated bonds, sparking a decline in long end US yields and the USD, with the DXY easing below 99."

"Still, given that the additional buybacks are very small and there is also no change in monetary policy, the USD is more likely to consolidate today rather than track lower."

"FOMC meeting minutes released this morning underscored a hawkish tilt at the Fed in the July meeting but have comparatively little impact on markets."