Dollar Slips Ahead of Bessent Announcement
The U.S. Dollar has slipped to its worst level in nearly seven months as Traders await U.S. Treasury Secretary Scott Bessent’s announcement of the scale of the Treasury’s expanded bond buyback operation this morning at 11am.
The Treasury announced the expanded operation in mid-August and indicated that they would ‘at least double’ the standard $2 billion buybacks that had been scheduled during their quarterly refunding announcement. As such, Bessent and the Treasury’s first expanded buyback operation will need to exceed $4 billion to have any hope of restraining longer term bond yields. Some economists are expecting as much as $8-10 billion in buybacks, while others do not expect Bessent to disclose the maximum size of the broader operation today, only the specifics of this week’s individual operation.
Oil continues its surge this morning, with Brent crude topping $100 per barrel for the first time since July and WTI crude trading over $95 per barrel, as tensions continue to escalate in the Strait of Hormuz. Iran attempted to strike a U.S. Navy warship twice with ballistic missiles overnight, and the U.S. military responded by destroying five Iranian oil tankers. Traders were already focused on Consumer Price Index (CPI) numbers set to be released later this week, but higher energy inputs could further increase their impact on interest rate pricing from the Federal Reserve.
What to Watch This Week…
- U.S. PPI, Thursday 8:30 AM
- U.S. CPI, Thursday 8:30 AM
- USA Online is always open
The complete Economic Calendar can be found here.
JPY
The Japanese Yen is up against the Dollar this morning after U.S. Treasury Secretary Scott Bessent stated that he has direct insight into the moves of Japanese policymakers, including the Bank of Japan and the Ministry of Finance, during his speech at Southern Methodist University yesterday evening. Bessent went on to issue an explicit warning to short sellers of the Yen, stating that ‘I am the house now. And you can bet against me if you want.’ Traders are interpreting Bessent’s statements as a clear signal of active U.S.-Japan coordination with regard to Yen intervention actions.
CAD
The Canadian Dollar is up against the Buck this morning despite trade negotiations with the U.S. continuing to deteriorate. Higher oil prices are lending support to the Loonie even as the U.S. announced new tariffs on Canadian diary, alcohol, and motorcycle goods to take effect in about three weeks. Canadian Prime Minister Mark Carney vowed to backstop the affected sectors no matter what it takes.