US acts on rising bond yields
The US dollar tumbled overnight after US Treasury Secretary Scott Bessent announced a doubling of the government’s weekly bond buyback program. The Treasury will expand the weekly cap from USD2b to USD4b.
The 30-year bond yield dropped from 5.28% to 5.18%.
The yield reached 5.34% on Tuesday, the highest level since 2007, driven by concerns about government spending, the war with Iran and higher inflation.
The US Treasury’s move saw the USD index fall to a three-month low.
The Aussie jumped back to a 10-week high with a 0.5% gain. The kiwi was even stronger, with NZD/USD up 1.0%.
In Asia, USD/JPY plunged 0.9%. USD/CNH fell 0.2%, while USD/SGD lost 0.6%.
RBA warns inflation might require further hikes
RBA Deputy Governor Andrew Hauser struck a firm tone on inflation, warning that interest rates may need to rise again if price pressures fail to ease.
Hauser stressed that inflation remains above target and said Australia continues to face strong capacity constraints, making it important to curb demand and moderate consumer spending. He also pushed back against recession concerns, noting that economic activity remains resilient.
For AUD/USD, support is seen at the 21-day EMA of 0.7043, followed by the 50-day EMA at 0.7029. On the upside, resistance is located at 0.7150.
China bond rally highlights economic slowdown concerns
Chinese government bonds continued to attract buyers even as yields rose in many global markets. Demand for longer-dated bonds pushed 30-year yields to their lowest level since late November, reflecting expectations that policymakers may introduce further support measures following weak July economic data.
The move also suggests liquidity remains concentrated in financial markets rather than flowing into the broader economy, which could make funding harder to access for private businesses as growth slows.
USD/CNH remains close to a three-year low. A break above the 21-day EMA at 6.7533 could open the door to the 50-day EMA at 6.7695. On the downside, psychological support is located at 6.7400.
Aussie, kiwi back at highs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 17 – 21 August
All times are in AEST
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
