US Treasury Action Pressures Dollar and Yields
The U.S. Treasury's announced bond buyback for the long end of the curve triggered a notable drop in Treasury yields and a broad-based decline in the US Dollar. The dollar's weakness was evident as the AUD/USD reached for its year-to-date high and the Mexican Peso hit a two-year high. While yields saw a partial recovery on a better-than-expected Services PMI, the US Dollar Index remained soft, holding near the 98.80 level ahead of upcoming inflation data and the Jackson Hole symposium.
Focus on North American Trade and US Policy Commentary
Developments in North American trade relations are being closely watched after former President Trump indicated he expects to reach a trade deal with Canada. Following this, officials in Mexico stated they anticipate similar outcomes in their own trade discussions. In other policy-related news, US Treasury Secretary Bessent is scheduled to hold a press conference, while former President Trump denied directing Bessent to intervene in the bond market.
Asian Economies Show Resilience Amid Policy Adjustments
Elsewhere, economic activity in Asia provided a mixed but constructive picture. Economists expect the Bank of Korea to continue its monetary tightening path with an interest rate hike at its next meeting, supported by upgraded GDP and inflation forecasts. Meanwhile, Malaysia reported a fourth consecutive month of double-digit export growth, driven by a resilient AI-driven electronics cycle and strong demand from the US and China.
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