US Treasury Buyback Surprise Sends Dollar Lower, Boosts Aussie and Kiwi

The US Treasury's surprise move to double bond buybacks of longer-dated Treasuries has had an unexpected ripple effect on global currencies, particularly the Australian and New Zealand dollars. This development pushed the US dollar lower, which in turn lifted the Aussie and Kiwi.

Australia's weak jobs data for June, with 15,800 fewer jobs and a near five-year high unemployment rate of 4.5%, would normally have weighed against the Aussie. However, the bigger global driver was the dollar's dip, which tends to lift higher-beta currencies like the Aussie and Kiwi.

The impact can be seen in rates too: Australia's 10-year yield fell to 4.989% from 5.073% earlier in the week, a reminder that US moves can ripple through global borrowing costs.