ING analysts expect the US Dollar to stay below 99.00 on Treasury buy-backs signaling lower yields and pro-risk flows.
Recent US Treasury buy-back operations are being interpreted as a signal to curb rising long-term yields, weakening the Dollar. ING analysts argue the move aims to stabilize markets rather than address liquidity issues, with the DXY index expected to remain below 99.00.
The Treasury’s actions follow concerns over elevated yields and potential fiscal consolidation plans, including efforts to reduce fraud. Analysts note high-beta currencies and emerging markets may outperform, though a sharp sell-off in Treasuries or equities could reverse the trend.
Markets have drawn comparisons to past policy shifts, but the focus remains on the Treasury’s intent to manage yields. The Dollar’s softer bias aligns with broader risk-on sentiment, though volatility could revive safe-haven demand.