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Dollar loses momentum as markets reassess US-Japan intervention, DBS says
DBS links the shift to higher long term US yields reflecting fiscal concerns and flags policy uncertainty around the Kansas City Fed Jackson Hole event Aug. 27 to 29.
DBS Group Research analyst Philip Wee said the US dollar is losing momentum as markets reassess expectations around US Japan intervention, shifting views on the Bank of Japan and the Federal Reserve, and responding to rising US fiscal risks. FXStreet notes Wee’s view that higher long term US yields are increasingly tied to fiscal concerns rather than growth, which could weaken the usual link between higher yields and a stronger USD.
Wee warned that this backdrop puts the Kansas City Fed’s Jackson Hole Symposium, scheduled for August 27 to 29, in focus. According to FXStreet, rather than strengthening the dollar’s haven appeal, the event could highlight policy uncertainty for US bondholders due to limited forward rate guidance amid heavy Treasury issuance.
In FXStreet’s market wrap, the report cited a broader US dollar selling bias supporting gains in GBP USD and EUR USD. It also said the US dollar resumed its downside alongside weaker-than-expected US economic data, fading geopolitical risk premium, and shifts in Fed expectations.