Dollar Slides Toward Three-Month Low as Treasury Debt Buyback Hits Yields

The Dollar Index sits at 98.8360, down 0.68% on the day. The slide traces to Wednesday's session, when the dollar sold off broadly after the US Treasury said it would double buybacks of longer-dated coupon debt — the 10-20 and 20-30 year sectors, from $2bn to at least $4bn per operation, running September 9 through November 4. That announcement helped pull the 30-year Treasury yield down 7.3bp to 5.212% and the 10-year down 3.4bp to 4.672%, easing pressure on the currency. Equities were mixed (S&P 500 +0.28%, Nasdaq -1.13%) and the VIX fell 3.91% to 15.22, hardly a risk-off tape. The policy backdrop remains a Fed funds target of 3.50-3.75%, with the live 2026 debate centered on the prospect of a hike rather than cuts.

Treasuries were mixed by tenor: the 3-month yield held flat at 3.705%, the 5-year edged up 0.6bp to 4.373%, while the 10-year fell 3.4bp to 4.672% and the 30-year dropped 7.3bp to 5.212%. Minutes from the Fed's July 28-29 meeting, released Wednesday, showed three dissents — Cleveland Fed's Beth Hammack, Dallas Fed's Lorie Logan and Minneapolis Fed's Neel Kashkari — each favouring a 0.25 percentage point hike under new Fed Chair Kevin Warsh. That sits alongside a headline asking whether Fed rate hikes are back on the table. Today's US data brings the Philly Fed Manufacturing Index (forecast 24.1, prior 41.4), Unemployment Claims (forecast 210K, prior 209K) and the CB Leading Index (forecast 0.1%, prior -0.2%).

EUR/USD: 1.1659, +0.72%, its highest level since June near $1.161, riding Wednesday's broad dollar selloff. GBP/USD: 1.3591, +0.44%, with UK CPI up to 2.9% y/y from 2.6% adding a secondary lift to the broad dollar selloff. USD/JPY: 158.59, -0.65%, yen gains built on Japanese bond and stock weakness tied to fiscal-spending concerns and BoJ September hike speculation. USD/CAD: 1.3824, -0.52%, supported by Trump's pause of the 50% Section 338 tariff on Canadian goods until end of day August 21, plus firmer crude oil.

EUR/USD trades at 1.1659, up 0.72% and sitting at its highest level since June after Wednesday's jump above $1.160, near $1.161. The move came as the dollar sold off broadly following the US Treasury's announcement doubling buybacks of longer-dated coupon debt across the 10-20 and 20-30 year sectors, from $2bn to at least $4bn per operation, effective September 9 through November 4 — a shift that pulled long-end Treasury yields sharply lower. On the euro side, markets are leaning toward a September ECB hike amid energy-driven inflation risk, widening the policy divergence versus a Fed where the live question remains a hike but markets have pared those odds on soft recent data. The ECB held its deposit rate at 2.25% on July 23 after a 25bp hike on June 11. Today's calendar brings Germany's PPI (forecast 0.5%, prior -0.3%) and the Bundesbank's Monthly Report.

German PPI m/m (forecast 0.5%, prior -0.3%, 16:00) and the Bundesbank's Monthly Report (20:00) are due. UK sees CBI Industrial Order Expectations (forecast -40, prior -45, 20:00). Canada releases producer price data — IPPI (forecast -0.4%, prior -1.4%) and RMPI (forecast -1.8%, prior -6.9%) — at 22:30. US releases land at 22:30: the Philly Fed Manufacturing Index (forecast 24.1, prior 41.4) and Unemployment Claims (forecast 210K, prior 209K), followed by the CB Leading Index (forecast 0.1%, prior -0.2%) at 00:00. Later, Japan's National Core CPI y/y (forecast 1.8%, prior 1.6%) and Flash Manufacturing PMI (forecast 55.1, prior 54.7) print, alongside Australia's Flash Manufacturing and Services PMIs.