The U.S. dollar’s near-term direction is increasingly tied to the Federal Reserve’s policy credibility and the Treasury’s expanded long-dated bond buyback program. The Treasury said it will at least double the maximum size of buyback operations to $4 billion per session, up from $2 billion, with the program running from September 9 through November 4.
The announcement coincided with a softer dollar, while gold and the Swiss franc strengthened. U.S. equities also retreated despite a drop in the 10-year Treasury yield, reflecting mixed signals across asset classes. Options markets showed rising demand for hedges against further dollar declines, particularly versus the euro, Swiss franc, and Swedish krona.
BofA Securities recommended a long position in the NZD/USD pair at 0.5957, targeting 0.62 with a stop loss at 0.58. The bank cited expectations for two additional rate hikes from the Reserve Bank of New Zealand and potential weather-related disruptions to global food supplies as tailwinds for New Zealand’s export prices and currency.
