• The U.S. dollar is trading near multi-month lows, pressured by growing concerns over U.S. debt and Treasury policy.
• The dollar posted its largest weekly decline against Bitcoin in nearly 3.5 years, while gold gained around 5% last week.
• The Australian and New Zealand dollars are hovering near three-month highs, while the euro remains comfortably above $1.16.
• U.S. Treasury’s decision to double long-end bond buybacks to at least $4 billion per operation has raised concerns over potential intervention in the bond market.
• Investors are increasingly worried that efforts to suppress long-term yields could fuel dollar debasement fears.
• Long-term bond yields remain elevated globally amid stronger growth expectations, rising inflation expectations and concerns over ballooning sovereign debt.
• Markets are now focused on the details of the U.S. sanctions package against Iran, particularly whether China could also be targeted.
• Fed Chair Kevin Warsh’s Jackson Hole speech on Friday will be closely watched for signals on interest rates, the Fed’s balance sheet, Treasury supply and the term premium.
• BOJ Deputy Governor Ryozo Himino’s comments this week could also influence expectations for another Japanese rate hike.

What’s Next?

• The dollar’s weakness is increasingly becoming a structural story rather than a short-term move. Treasury buybacks, rising fiscal concerns and questions over the credibility of U.S. debt management are putting additional pressure on the greenback.
• If U.S. yields remain elevated while the dollar continues to weaken, the combination could be particularly bullish for gold and other hard assets. However, a hawkish signal from Warsh or a renewed surge in Treasury yields could trigger a sharp dollar rebound.