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Brown Brothers Harriman’s (BBH) Elias Haddad notes the US Dollar (USD) is weaker against all major currencies as longer-term US Treasury yields edge lower following buyback plans. Haddad argues expanded buybacks and fiscal messaging may cap long-end yields but at a credibility cost for the USD. Upcoming US August PMI will test whether the US growth advantage can still offer the Dollar near-term support.

Treasury actions pressure the Dollar

"USD is down against all major currencies, global stocks and bonds are up, while the rally in crude oil prices stalled. Longer term Treasury yields edged a bit lower after yesterday’s rise with 30-year yields modestly below Wednesday’s buyback announcement levels."

"Yesterday, Treasury Secretary Scott Bessent warned the buyback operation could be larger than the $4bn announced, while touting the “big toolkit” at his disposal to tame the Treasury market. Bessent also attempted to ease concerns over US fiscal policy noting the White House would announce at the end of this week or early next week “an increased focus on fiscal consolidation.”"

"The Congressional Budget Office (CBO) offers little evidence of fiscal consolidation, projecting historically large budget deficits and debt rising to a record 120% of GDP by 2036. Without credible spending cuts or revenue increases, the White House plan risks being little more than putting lipstick on a pig. "

"Regardless, the boost to the Treasury’s buyback operation and the threat of more measures should help cap long-end Treasury yields. But the relief comes with a credibility cost that translates to a weaker USD. The Treasury’s intervention blurs the lines between improving market functioning and suppressing borrowing costs to contain fiscal stress."

"The US August PMI will test whether the US growth advantage relative to other major economies remains intact (2:45pm London, 9:45am New York). If so, the data can offer USD some near-term support, while signs the US growth edge is narrowing would deepen its losses."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• Gold heads for a third straight weekly gain, reaching its highest level since mid-May.
• A softer US Dollar and reduced expectations of an imminent Fed rate hike support the precious metal.
• XAU/USD rises above major daily moving averages, with $4,600 acting as the immediate resistance.

Gold (XAU/USD) is heading for a third consecutive weekly gain on Friday, extending an impressive rally that has lifted the precious metal by around 13% so far this month. At the time of writing, XAU/USD trades near $4,590 after briefly climbing above $4,600, its highest level since May 15.

The rally is driven by a combination of factors that have heightened macroeconomic uncertainty and encouraged traders to seek exposure to Gold. The biggest trigger this week was the US Treasury’s surprise decision to double its liquidity-support buybacks for longer-dated government securities to at least $4 billion per operation.

Long-term US Treasury yields initially fell sharply after the announcement but have since recovered most of their losses. However, the rebound has done little to stop Gold’s advance. Concerns about rising US government debt, large budget deficits and persistent inflation are eroding investor confidence in US assets, with the US Dollar (USD) paying the price.

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is trading around 98.65, near three-month lows.

Uncertainty surrounding the Federal Reserve (Fed) is also adding to the nervous mood. Under Chairman Kevin Warsh, the central bank has placed less emphasis on forward guidance, leaving markets with fewer clear signals about the direction of interest rates. However, recent US employment and inflation data have reduced expectations of a rate hike at the upcoming meeting, providing the spark for Gold’s rally earlier this month.

Meanwhile, continued central-bank purchases, particularly from China, and stronger inflows into Gold exchange-traded funds (ETFs) keep underlying demand firm.

Still, Gold faces some hurdles. Treasury yields remain elevated, increasing the opportunity cost of holding the non-yielding metal. Energy-driven inflation is another concern, as higher Oil prices linked to the US-Iran stalemate could keep inflation above the Fed’s 2% target for longer and maintain pressure on the central bank to raise interest rates.

Technical Analysis: Bulls stay dominant as RSI nears overbought levels

XAU/USD holds a clear bullish bias as it extends above the 50-day, 100-day and 200-day Simple Moving Averages (SMAs), which collectively underpin the recent uptrend. The Relative Strength Index (RSI) on the daily chart is near 70 and flags overbought conditions, while the Average Directional Index (ADX) is around 32, suggesting a moderate trend, and the Moving Average Convergence Divergence (MACD) indicator remains constructive, hinting that upside momentum is strong but getting stretched.

On the topside, immediate resistance emerges at the nearby horizontal level around $4,600, ahead of a higher barrier at $4,750. On the downside, initial support is seen at the 200-day SMA at $4,514, followed by the 100-day SMA at $4,379 and the 50-day SMA at $4,172, before a more distant structural floor at $4,000.

While the trend favors further gains, the overbought RSI warns that any failure to clear $4,600 could trigger a corrective pullback toward these underlying demand zones.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

The US Dollar Index (DXY) is broadly consolidating near the 99.00 level as investors process the US Treasury's expanded long-end bond buyback and a modest rebound in Treasury yields. While the buybacks initially cooled long-term borrowing costs, institutional strategists are divided on whether the policy move represents a fundamental pivot toward a softer Greenback or merely a temporary fix that leaves the US Dollar susceptible to renewed upside if inflation expectations re-ignite.

Treasury buybacks favor pro-risk FX, not the Dollar

Analysts at ING argue that the Treasury's buyback adjustments should be viewed as a proactive effort to protect the long end of the yield curve rather than a loss of policy credibility. If long-term yields remain contained, this creates a pro-risk environment characterized by a gradual US Dollar depreciation. Under this setup, high-beta commodity and emerging market currencies stand to outperform, provided equity and bond markets avoid a broader sell-off.

We see this week's developments less as a policy credibility story and more as a soft dollar, pro-risk story if the US Treasury is taking a greater interest in protecting the long end (...) That probably means a gentler dollar decline and some outperformance of high-beta commodity currencies and emerging market currencies in general.

Buyback impact leaves USD vulnerable to inflation shocks

Analysts at DBS Group Research maintain a more cautious perspective, observing that DXY has firmed alongside a modest rebound in long-end yields. Because the US Congress ultimately controls the fiscal budget, administrative buybacks alone cannot alter the broader deficit path. Furthermore, external risks, such as impending US sanctions on Iran, could push energy prices higher and reignite inflation fears, ultimately boosting yields and Greenback demand.

Without any meaningful change to the US fiscal trajectory (given that the US budget is set by Congress and not the Treasury), tweaks around buybacks can only have a small, transient impact on markets

How long will the Treasury buyback effect last?

The banks project that DXY will remain tightly bounded around the 99.00 handle in the immediate term. ING anticipates that official concern over long-end yields will keep the US Dollar capped below 99.00 and foster a favorable backdrop for risk-sensitive currencies. On the other hand, DBS Group Research highlights that without structural fiscal reform, potential inflation shocks from Middle East geopolitical sanctions could easily reignite US yield momentum and push the Greenback higher.

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• The New Zealand Dollar extends its advance for a third consecutive day and reaches its highest level since early June.
• Fading expectations of an immediate US rate hike weigh on the US Dollar, while prospects of monetary tightening in New Zealand support the Kiwi.
• Investors now await US PMI data, while tensions with Iran keep inflation risks and potential safe-haven demand in focus.

NZD/USD extends its advance on Friday and trades around 0.5980 at the time of writing, up 0.62% on the day. The pair reached its highest level since early June and is heading for a solid weekly performance, mainly supported by persistent weakness in the US Dollar (USD).

The US Dollar Index (DXY), which measures the Greenback's performance against a basket of six major currencies, loses 0.23% to 98.65 on Friday at the time of press. The US Dollar remains under pressure as investors scale back expectations of an immediate interest rate hike by the Federal Reserve (Fed).

The Minutes of the latest Federal Open Market Committee (FOMC) meeting nevertheless maintained a relatively hawkish tone. Policymakers indicated that further tightening could become necessary if progress on inflation remains insufficient. Markets therefore continue to consider a possible rate hike before the end of the year, particularly amid inflation risks stemming from higher Oil prices.

Meanwhile, the New Zealand Dollar (NZD) benefits from expectations of another interest rate hike by the Reserve Bank of New Zealand (RBNZ). The divergence between fading bets on immediate action from the Fed and prospects of monetary tightening in New Zealand therefore provides a supportive backdrop for NZD/USD.

New Zealand trade data released on Friday failed to derail this momentum. New Zealand records a monthly trade deficit of NZ$1,949M in July, but investors remain more focused on the monetary policy outlook and US Dollar dynamics.

Geopolitical risks could, however, limit the Greenback's decline. Tensions between the United States (US) and Iran over the Strait of Hormuz remain elevated, while higher energy prices fuel concerns about inflation. US President Donald Trump has notably threatened severe new sanctions against Iran and countries helping Tehran circumvent US restrictions. A further deterioration in the situation could revive demand for the safe-haven US Dollar.

Attention now turns to the preliminary S&P Global US Purchasing Managers Indices (PMIs) for August. Consensus forecasts point to a modest slowdown, with the Manufacturing PMI expected at 53.8, compared with 53.9 in July, and the Services PMI at 54, down from 54.6 previously. Weaker-than-expected figures could increase pressure on the US Dollar and continue to support NZD/USD, while an upside surprise could offer some relief to the Greenback.

Record short NZD bets clash with strong performance and El Nino tailwinds

Analysts at MUFG highlight that the weekly IMM positioning data, “tracked by many without necessarily throwing out a strong message,” is sending a clear signal for the New Zealand Dollar. The latest report, to the week ending 11 August, shows Leveraged Funds’ total short position in NZD has “hit a record in the series of the data going back to 2006,” a notable contrast to spot performance.

MUFG points out that “on a year-to-date basis NZD is actually the third best performing G10 currency after NOK and AUD.” The RBNZ policy rate “currently stand at 2.50% but the OIS curve implies expectations of nearly 100bps of tightening over the next 12mths,” yet in real terms policy remains accommodative. They note that “the actual inflation rate stands at 4.1% (Q/Q) although the monthly data shows slightly lower at 3.6%. Still, the real policy rate is more negative than across most of the rest of G10 and that could be encouraging this speculative selling.”

Against this backdrop, MUFG cautions that “while 100bps of tightening may prove excessive, the scale of short NZD positioning looks more extreme and we would argue at this level, the bar is relatively high for a notable leg lower for NZD.”

NZD/USD technical analysis

In the one-hour chart, NZD/USD trades at 0.5979, maintaining a bullish near-term tone as it holds above the 100-period and 200-period simple moving averages (SMAs) at 0.5917 and 0.5894 respectively. The pair is also trading over nearby horizontal support at 0.5960, while the Relative Strength Index (RSI) at around 72 sits in overbought territory, hinting that the latest advance could be losing some steam even as the broader uptrend remains supported.

On the downside, initial support is seen at 0.5960, followed by additional floors at 0.5940 and 0.5925, with the 100-period SMA at 0.5917 and the 200-period SMA at 0.5894 reinforcing the underlying bullish structure. On the topside, immediate resistance is located at the horizontal barrier near 0.5995, and a sustained break above this level would open the door for further gains, while failure to clear it might trigger a corrective pullback toward the cited support cluster.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

• Gold resumes its uptrend on Friday to test three-month highs in the $4,600 area
• Investors' concerns about the US plan to boost bond buybacks are hammering the US Dollar.
• XAU/USD bulls have gained confidence after breaching the jey 200-day SMA.

Gold (XAU/USD) extends gains on Friday, with bulls aiming for a retest of the $4,600 resistance area, the top of the last six months' trading range. Precious metals are gaining momentum, favoured by a sharp US Dollar selloff, following the announcement of a US Treasury plan to boost liquidity to repurchase long-term securities.

Rabobank analysts observe that “normally, lower Treasury yields weaken the currency through the interest-rate channel,” but this episode appears different. “This time, gold and crypto also rallied, suggesting concern about fiscal credibility and the perceived management of borrowing costs,” says the bank. Against that backdrop, the experts wonder whether “the end-result will be unchanged long-term yields, but a weaker dollar,” underscoring a potential shift in how markets are pricing US risks.

Technical Analysis: Bullish momentum improves above the 200-day SMA

XAU/USD trades at $4,582, retaining a bullish near-term bias although the Relative Strength Index (RSI) is reaching overbought levels in most timeframes. The precious metal has breached the 200-day Simple Moving Average (SMA), a very popular indicator among traders, but the daily chart shows RSI right at the 70 level, which hints at a stretched rally.

The Moving Average Convergence Divergence (MACD) remains positive, with the histogram printing wider green bars, which suggests that dips are likely to be bought.

Bulls are focused on the horizontal cap near $4,590 (May 29 highs). Above here, the $4700 psychological level and May's top at $4.4773 emerge as the next targets, although a bit far away for today.

On the downside, the 200-day Simple Moving Average (SMA) at $4,514 defends the bullish structure. A bearish reaction below that level would expose the previous top, at $4,450, and the August 14 low, near $4,310.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

MUFG’s Derek Halpenny notes that the US Dollar has weakened as investors focus on potential US Treasury measures to stem the decline in Treasury yields, while Japanese inflation data supports expectations for a 25bp BoJ rate hike in September. He remains sceptical that the US will deliver credible fiscal consolidation and sees limited scope for further EUR/USD upside in the near term.

Dollar pressured by fiscal doubts

"The US dollar has weakened further today after stabilising yesterday with investors focused on potential further action by the US Treasury to stem the decline in UST bond yields."

"Yields are broadly unchanged today although JGB yields have jumped following the release of nationwide CPI data for July which revealed a rebound back toward the 2.0% level. The core-core CPI rate jumped to 1.9% with underlying inflation lifted by certain foods and dining out."

"The data backs up current market pricing, and our view, that the BoJ will hike rates by 25bps at the next policy meeting in September."

"The US now looks to be signalling it is heading in the opposite direction after Scott Bessent stated that the Treasury would announce today or early next week “an increased focus on fiscal consolidation”."

"Obviously, we, like many market participants, are very sceptical of the US announcing anything of any significance that would lead to credible fiscal consolidation."

“A US fiscal initiative that lacks credibility won’t help UST bonds or the dollar but the appetite to sell the dollar remains contained by Middle East risks. For Europe that is evident through the steady rise in natural gas prices.”

"It’s difficult to envisage in these circumstances much further upside for EUR/USD over the short-term."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Deutsche Bank strategists highlight a sharp improvement in sentiment towards Prime Minister Burnham and Labour. Their dbDIG household survey shows optimism about stronger United Kingdom (UK) economic growth under the new government, but households are notably more cautious about their own personal finances, with optimism skewed towards younger and higher-income respondents.

Households optimistic on UK growth

"Just a month into his premiership, Prime Minister Burnham has already seen a bounce in sentiment. The latest polls now have Labour as the most popular party, ahead of Reform for the first time in about 18 months."

"PM Burnham’s popularity has fed through into the economy too. Our own dbDIG household survey highlighted two things."

"First, when asked whether Burnham would be able to deliver stronger economic growth in the UK than the previous government, households were optimistic. In fact, with a positive net balance of 21%, more households are confident that the new government can deliver better economic growth, particularly among younger respondents (those aged 18-34). Across income groups, higher-income households are the most optimistic, with those earning more than GBP 50k reporting a net balance of +37% on economic optimism."

"Second, when it comes to households’ own personal finances, the responses are more mixed, suggesting an interesting paradox between perceptions of economic growth and their own financial outlook. Across the survey as a whole, only 2% more households think they will be financially better off under the new government. The results vary significantly across cohorts, with younger respondents the most optimistic and older age groups considerably less so."

"Opinions, estimates and projections constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinions of Deutsche Bank and are subject to change without notice."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• The US S&P Global flash PMIs for August are expected to show that economic activity kept growing at healthy levels.
• Services and manufacturing PMIs are seen ticking down but highlighting comparatively strong economic activity.
• The US Dollar is likely to remain on the back foot, weighed by the US Treasury’s plans to boost long-term Government Bonds.

S&P Global will release the preliminary figures of August’s United States Purchasing Managers' Indices (PMIs), a report collecting top private sector executives' opinions about business conditions, to provide an early indication of momentum in the world’s largest economy.

The report includes three measures: the Manufacturing PMI, the Services PMI, and the Composite PMI (a weighted combination of the two), and covers a wide range of aspects, from production or export activity to capacity utilisation, employment, and inventory levels.

PMI numbers indicate sector expansion when above 50 and contraction otherwise.

July’s figures highlighted a sharp improvement in business activity, as the S&P Global Composite PMI jumped to 54.5 from June’s 51.9, beating market expectations and recording its best performance since October 2025. Nevertheless, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, warned that manufacturing activity slowed down, weighed down by supplier delays due to the Middle East conflict.

What can we expect from the August S&P Global PMI report?

For August, the market consensus anticipates a mild slowdown in economic activity, with the Manufacturing PMI ticking down to 53.8 from July’s 53.9 reading and the Services PMI easing to 54.0 from last month’s 54.6.

Barring a significant miss, August figures will still highlight healthy growth in both the manufacturing and services sectors, especially if compared with most developed economies. In general terms, PMI data from July and August is likely to remain consistent with steady GDP growth and endorse the view of US economic exceptionalism amid a struggling global economy. 

July’s report warned that some of the improvements seen in the last month would prove short-lived, as the gain in hospitality spend was mostly due to special, one-off events such as the World Cup while upside price pressures threaten to weaken demand and constrain growth.

In that sense, a sharper-than-expected slowdown is likely to increase investors’ concerns about the economic outlook, triggered by the disappointing US Nonfarm Payrolls report seen earlier in the month. This would add bearish pressure to an already weak US Dollar, which has been hammered this week by the US Treasury’s plan to increase its purchases of long-term Government debt to stem the bond crisis.   

A positive surprise, on the contrary, is likely to improve confidence in the US economy, although the impact on the US Dollar will likely remain limited, unless there is a sharp deviation from market expectations.

When will the August flash US S&P Global PMIs be released, and how could they affect EUR/USD?

The S&P Global Manufacturing, Services, and Composite PMIs report will be released at 13:45 GMT and is expected to show a moderate slowdown in US business activity. 

Earlier on the day, the Eurozone’s HCOB Flash PMIs beat expectations, as manufacturing activity expanded at a faster pace than anticipated and Services PMI kept growing at a steady pace, although at levels consistent with slow growth. The data had a moderately positive impact on the EUR/USD.

EUR/USD Daily Chart

Guillermo Alcalá, FX analyst at FXStreet, observes the EUR/USD technical picture showing a solid bullish momentum after breaching the top of the last two months' trading range, and the key 200-day Simple Moving Average (SMA), at 1.1630, a very popular indicator for FX traders. The Relative Strength Index (RSI), however, highlights heavily overbought levels in most timeframes, which should act as a warning for buyers. 

A confirmation above the late May highs at 1.1685 would clear the path towards the 1.1800 resistance area, which capped bulls several times in early May. Failure to breach 1.1685, on the other hand, would bring the mentioned 200-day SMA back into focus.

Rabobank's Senior US Strategist Philip Marey discusses United States (US) Treasuries, noting that the Treasury Department’s surprise move to boost buybacks of longer-term bonds has only briefly interrupted rising yields. Marey highlights unchanged macro fundamentals such as elevated inflation, widening budget deficits and AI-related investment demand, and argues that unpredictable issuance and limited buyback firepower could ultimately push yields higher and force Federal Reserve (Fed) intervention.

Treasury buybacks and yield dynamics

"The Treasury Department’s extraordinary announcement to unexpectedly boost buybacks of longer-term bonds has only temporarily interrupted the rise in yields."

"The real question is: can yields be stopped from rising when the macroeconomic fundamentals − elevated inflation, rising budget deficits, AI-related investment demand − remain entirely unchanged?"

"While Congress and the White House actually have the power to address some of these fundamental drivers, the Treasury has resorted to market intervention instead."

"This introduces a whole new set of complications. By making debt issuance less predictable, it fuels market volatility. Ironically, this could force investors to demand an even higher risk premium on Treasury yields."

"The ultimate problem with the Treasury’s intervention is that it costs money. For now, the Treasury is funding this by shifting from longer-term debt to shorter-term debt. But with the total federal debt constrained by the debt ceiling, the Treasury will eventually run out of ammunition."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• GBP/USD rallies to fresh six-month highs beyond 1.3670, following the release of upbeat business activity figures.
• UK services activity grew at its fastest pace since February, while Manufacturing growth slowed down.
• The US Dollar remains on the defensive amid the US Treasury's plan to boost buybacks of long-term securities.

The British Pound (GBP) rallied to fresh six-month highs against the US Dollar (USD) on Friday, boosted by stronger-than-expected UK business activity data, while the US Dollar remains depressed following the US Treasury’s plan to boost bond buybacks. The GBP/USD pair has breached the 1.3660 level for the first time since February and is trading just above 1.3670 at the time of writing. 

Preliminary data released by S&P Global revealed that July’s UK Services Purchasing Managers Index (PMI) improved to 52.8 from June’s 52.1 reading, against expectations of a slight decline to 51.8. Manufacturing Activity slowed down to 51.5, from 51.9 in the previous month, in line with market expectations, and the Composite PMI ticked up to 52.5 from 52.2 in June, also beating forecasts of a decline to 51.6.

Earlier on the day, National Statistics figures revealed that retail consumption contracted 0.5% in the UK in July, meeting the market's expectations and following a  0.7% increase in June. Year-over-year, sales increased at a 1.6% pace, down from 3.8% in June and below the consensus 2.2%.

Beyond that, Public Sector Net Borrowing increased by GBP 1.8 billion in July, below June’s GBP12.78 bullion but exceeding the market expectations of GBP0.3 billion.

Bond Buybacks keep weighing on the USD

The US Dollar remains on the defensive as US Treasury Secretary Scott Bessent affirmed on Thursday that bond buybacks might increase beyond the $4 billion per operation announced one day before.

On Wednesday, the US Treasury disclosed a plan to double liquidity to repurchase long-term securities, in a move aimed at stemming the yield rally. The return for the 30-year Treasury Bond had reached 19-year highs earlier this week, with investors increasingly reluctant to buy US Government Bonds, amid concerns about escalating debt, which topped 40 trillion earlier in the week.

Strategists at BBH see the this plan as a debt-management swap ”under which the Treasury “buys and retires older, less liquid bonds (off-the-run) in favor of new, more liquid debt (on-the-run) issued through its regular auction.” BBH experts, however, warn that that investors come to believe that “the Treasury is managing yields rather than liquidity,” which, in their opinion “undermines US fiscal credibility and is a drag on USD.”