Dollar Slumps as Repatriation Trends Intensify Yen Carry Trade Unwind

The US dollar has been declining for five of the past six sessions due to concerns over the Treasury's activity in the debt market, the ECB's aggressive tightening policy, and capital shifting from the US to Japan.

The yen's advance has reinforced this move, while a rally in Brent oil above $100 per barrel and a pullback in the S&P 500 have failed to provide sustained support for the greenback. Additionally, rising Treasury yields have not helped the dollar.

Attention is focused on the US Treasury's plans to buy back $6 billion of long-dated bonds by early November and the subsequent six operations. Japan, as the largest holder of Treasuries with over $1.1 trillion, may encourage repatriation due to higher domestic yields and long-term Japanese yields at their highest levels since the 1990s.

The Government Pension Investment Fund (GPIF) and other pension funds are in focus for potential capital repatriation. Norway is also preparing to invest billions of dollars in Japanese assets, further contributing to the trend.