The U.S. dollar came under pressure after the Treasury announced plans to at least double the maximum size of long-term bond buybacks to $4 billion per operation, up from $2 billion, effective between September 9 and November 4. The move, aimed at managing debt maturity profiles and supporting market liquidity, coincided with a broad-based retreat in the greenback.
Gold and the Swiss franc strengthened as investors sought safe-haven exposure, while U.S. equities slipped despite a decline in 10-year Treasury yields. Options market data showed increased demand for protection against further dollar weakness, particularly against the euro, Swiss franc, and Swedish krona.
BofA Securities recommended a long position in the New Zealand dollar versus the U.S. dollar at 0.5957, with a target of 0.62 and a stop loss at 0.58. The bank cited expectations for two additional interest rate hikes from the Reserve Bank of New Zealand as a key driver for the trade. The RBNZ’s policy path remains a focal point for currency traders amid shifting global rate expectations.
Analysts note that the dollar’s near-term trajectory continues to hinge on the credibility of Federal Reserve policy and the Treasury’s debt management strategy. The buyback expansion, while technical in nature, underscores the government’s efforts to stabilize bond markets amid elevated deficit levels and evolving macroeconomic conditions.
