Dollar Slides on Treasury Buyback Operations
Treasury Support
The US Dollar is pushing lower today ahead of the upcoming FOMC minute due for release this evening. The move has been linked to news that the US Treasury will more than double its long-term debt repurchases from $2 billion to over $4 billion targeting the 10 – 30-year part of the market. Yields are plunging today in response to the news with traders viewing the liquidity support initiative as further evidence that no near-term tightening is likely. Market pricing for a Fed hike next month has sunken to around 35% from as high as 70% last week. The recent batch of softer-than-forecast US data has driven expectations lower and this week’s Treasury announcement looks to have reinforced this narrative.
July FOMC Mins in Focus
Looking ahead today, the July FOMC minutes will be closely watched. The voting split at the meeting 9:3, was more hawkish than expected with 3 members voting for a hike. As such, there could be some hawkish viewpoints shared in the minutes that might help underpin the Dollar near-term. However, the broad expectation is that the minutes should prove neutral enough not to shift the focus away from the recent US data soft-patch. Indeed, upcoming CPI and jobs data ahead of the September FOMC will remain the key determinants for that meeting.
Technical Views
DXY
The index is testing below the 99.15 level today as the reversal from the 101.91 highs gathers pace. With momentum studies bearish here, focus is on a continuation lower with 98.24 the next support level to watch. Meanwhile, bulls need to get back above 100.18 to alleviate near-term bearish risks.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% and 73% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.