Treasury Buybacks and Australia Jobs Shake Global Markets

Treasury buybacks and Australia jobs data shake global markets as gold surges and the US dollar extends its losses.

Falling Treasury yields and broad US dollar weakness set the tone heading into Thursday’s Asian session, following the US Treasury’s announcement to double its buybacks of longer-dated government bonds. The move pushed long-term yields sharply lower, eroding some of the dollar’s yield advantage and sending gold surging. Equities also benefited from the improving financial conditions. The Federal Reserve’s July meeting minutes struck a hawkish tone, though they carried less market impact than the Treasury announcement. Meanwhile, a 4.4 million barrel EIA crude build weighed on oil, though persistent Middle East supply risks continued to provide a price floor.

Treasury Buybacks and Australia Jobs Shake Global Markets

The US dollar remained under pressure Thursday after the DXY dropped approximately 0.72% to 98.93 on Wednesday, its lowest level since May. The Treasury’s expanded bond buyback program drove long-term yields lower and reduced the greenback’s yield appeal. The Fed’s July meeting minutes revealed a more hawkish internal debate, with several officials supporting a potential rate hike if inflation stays above the 2% target. Three policymakers, Beth Hammack, Neel Kashkari, and Lorie Logan, had already dissented at the July 28-29 meeting in favour of an immediate 25 basis point increase. However, softer recent inflation and economic data have reduced market expectations for an imminent September hike. The next FOMC meeting takes place September 15-16.

Gold Surges to Two-Month High

Gold extended its rally Thursday, building on a more than 3% surge on Wednesday. Spot gold climbed to around $4,488 per ounce, its highest level in over two months, while futures closed near $4,545. A weaker US dollar and falling Treasury yields following the buyback announcement drove the move. Softer US employment, inflation, and retail sales data have further reduced rate hike expectations, adding tailwinds for bullion. Lower rate expectations generally pressure the dollar and Treasury yields, making non-yielding assets such as gold more attractive to investors seeking alternatives.

Australian Dollar Eyes Employment Report

The Australian dollar faces its biggest test of the session with the release of July employment data at 1:30 AM GMT. Markets expect employment growth to slow sharply to 11.7K from the prior reading of 76.3K, while the unemployment rate is forecast to hold steady at 4.4%. A stronger-than-expected result could support the AUD by reinforcing expectations that the Reserve Bank of Australia may need to raise rates again, particularly given Deputy Governor Hauser’s recent warnings about persistent inflation risks.

The RBA holds its cash rate at 4.35% following three increases earlier in 2026, maintaining a restrictive stance to bring inflation back toward the 2% to 3% target. Australia’s CPI rose 3.8% year-over-year in June, down from 4.0% in May, though trimmed-mean inflation remained sticky at 3.6%. The next RBA meeting takes place September 28-29.

Kiwi Dollar Holds Firm on Hawkish RBNZ Outlook

The New Zealand dollar recovered toward 0.5900 against the US dollar, supported by broad greenback weakness and an increasingly hawkish RBNZ outlook. The RBNZ raised its Official Cash Rate by 25 basis points to 2.50% at its July 8 meeting, marking the first hike of the current tightening cycle. Policymakers signalled further increases remain likely, though timing will depend on incoming data. Inflation peaked at an estimated 3.9% in Q2 2026, with the RBNZ projecting a gradual return to its 2% midpoint by mid-2027. China’s economic slowdown and any deterioration in global risk sentiment remain the key risks limiting further NZD upside. The next RBNZ meeting falls on September 2.

Japanese Yen Gains Bullish Momentum

The yen carries an increasingly bullish fundamental backdrop as rising Japanese inflation, surging JGB yields, and growing Bank of Japan rate hike expectations challenge its recent weakness. The BOJ held its short-term policy rate at 1.00% at its July 30-31 meeting, maintaining confidence in Japan’s moderate economic recovery while signalling that further tightening will proceed gradually. Core inflation remains above the BOJ’s 2% target, supported by broad-based services inflation and rising labour costs. Markets widely anticipate another 25 basis point increase later in 2026, with timing dependent on incoming inflation and wage data. Japanese CPI due Friday represents the next major catalyst for USD/JPY direction. The next BOJ meeting is scheduled for September 17-18.

Oil Holds Gains on Strait of Hormuz Tensions

Oil extended its rally into Thursday, with Brent settling around $91.62 per barrel and WTI near $85.83 on Wednesday, both benchmarks reaching their highest levels in roughly four weeks. Geopolitical risk surrounding Iran and the Strait of Hormuz continues to drive a significant risk premium into crude prices. Vessel traffic through the Strait remains severely reduced, with no meaningful progress toward resolving the standoff. The UAE’s decision to cut financial and economic ties with Iran added further upward pressure to the market, keeping supply concerns firmly in focus despite the bearish signal from Wednesday’s large US crude inventory build.

Key Events to Watch

The US Philly Fed Manufacturing Index and weekly Unemployment Claims both land at 12:30 PM GMT and carry the potential to influence dollar direction and broader risk sentiment. Australia’s employment report at 1:30 AM GMT stands as the most significant event for currency markets in the Asian session, with the AUD/USD and AUD/JPY pairs most sensitive to the outcome.

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