US dollar hits three-month low as Treasury doubles bond buyback

The US dollar fell to a three-month low after the Treasury doubled its weekly bond buyback to $4 billion, easing long-end yield pressure.

"So far, the surprise buyback program has coincided with a weaker USD, higher gold prices and rising breakeven inflation rates," strategists at OCBC Group Research said in a report.

The 30-year Treasury yield dropped from 5.28 percent to 5.18 percent after touching 5.34 percent on Tuesday, the highest since 2007. The Aussie jumped 0.5 percent to a 10-week high, while NZD/USD rose 1.0 percent. USD/JPY plunged 0.9 percent, USD/CNH fell 0.2 percent and USD/SGD lost 0.6 percent.

The dollar's slide rippled across Asia, with the Indian rupee opening 19 paise higher at 95.56 per dollar and the Malaysian ringgit leading regional gains with a 0.359 percent advance. OCBC strategists cautioned the plan "failed to anchor long-term yields for now," raising doubts about whether buybacks can sustainably lower borrowing costs against persistent fiscal pressures.

RBA warns on inflation

RBA Deputy Governor Andrew Hauser struck a firm tone on inflation, warning that interest rates may need to rise again if price pressures fail to ease. Hauser stressed that inflation remains above target and said Australia continues to face strong capacity constraints, making it important to curb demand and moderate consumer spending. He pushed back against recession concerns, noting that economic activity remains resilient. For AUD/USD, support is seen at the 21-day EMA of 0.7043, followed by the 50-day EMA at 0.7029, with resistance at 0.7150.

China bond rally

Chinese government bonds continued to attract buyers even as yields rose in many global markets. Demand for longer-dated bonds pushed 30-year yields to their lowest level since late November, reflecting expectations that policymakers may introduce further support measures after weak July economic data. The move also suggests liquidity remains concentrated in financial markets rather than flowing into the broader economy, which could make funding harder to access for private businesses as growth slows. USD/CNH remains close to a three-year low, with a break above the 21-day EMA at 6.7533 opening the door to the 50-day EMA at 6.7695.

Baht, won lag regional rally

The dollar fell 0.5 percent to 1,387.30 won and edged 0.1 percent lower to 1.2712 Singapore dollars, LSEG data show. The Thai baht is likely to stay weak against the dollar in the near term, with BMI, a unit of Fitch Solutions, citing Thailand's relatively accommodative monetary policy stance and elevated global energy prices. BMI expects the baht to trade largely within 32.50-33.50 against the dollar; the currency was 0.1 percent lower at 32.81.

The Treasury's move marks an attempt to suppress long-end borrowing costs that had climbed to levels last seen in 2007, driven by concerns about government spending, the war with Iran and higher inflation. Whether the buyback can hold yields down over the medium term remains in question, with OCBC pointing to persistent fiscal and structural pressures. For Asian exporters and importers, a weaker dollar eases imported inflation but pressures dollar-denominated revenue, while central banks from Sydney to Bangkok weigh the balance between supporting growth and containing price pressures.

This article is for informational purposes only and does not constitute investment advice.