Treasury Buyback Move Weighs on Dollar, Lifts AUD/USD

A sharp climb in US Treasury yields set the tone for the week before the Treasury Department stepped in, expanding its long-term bond buyback programme. The intervention improved liquidity conditions and briefly eased borrowing costs, but the side effect was a weaker US dollar, a tailwind for AUD/USD.

With US debt now exceeding USD40 trillion and oil prices staying elevated, investors are increasingly questioning whether Washington is willing to tolerate a softer dollar to keep the bond market stable. That question alone has been enough to keep dollar bulls cautious.

For AUD/USD, this policy backdrop matters more than domestic data right now. As long as Treasury actions signal tolerance for dollar depreciation, the pair has structural support independent of the RBA's own next move.