Traders react to US Treasury doubling bond buyback operations, pressuring the USD ahead of key PCE inflation data.
The USD/JPY pair fell to near 158.90 in Asian trading Wednesday as the US Treasury’s expanded bond buyback program weighed on the dollar. The Treasury will increase buybacks to at least $4 billion per operation, up from $2 billion, to address rising long-term borrowing costs amid a national debt exceeding $40 trillion.
Market focus shifts to Wednesday’s US PCE Price Index data, a key inflation gauge, before the Jackson Hole symposium on Friday. The Treasury may also tap its $1 trillion General Account to fund bond purchases, adding further pressure on the USD.
The Bank of Japan will not attend Jackson Hole, with Governor Kazuo Ueda absent due to scheduling conflicts. Economists in a Reuters poll expect a BoJ rate hike in September, with some forecasting another increase by year-end.