Dollar Slides, Gold Tops $4,500 on Treasury Buyback Plan
As of 2026-08-20 00:00 SGT
Key points
- The US Treasury said it would double the size of its long-end liquidity-support buyback operations to $4 billion per operation from $2 billion, sending Treasury yields sharply lower and the dollar broadly weaker
- USD/JPY fell 0.70% to 158.46 and EUR/USD surged 0.78% to 1.1667 on the yield-driven dollar slide, while GBP/USD pushed to a three-month peak after UK CPI held at 2.9% y/y in July
- Japan's Nikkei 225 closed down 3.16% at 65,326 as AI and chip names led a risk-off slide tied to Middle East tensions and the earlier yield run-up; Hong Kong's Hang Seng eked out a 0.16% gain
- Gold climbed 2.88% to $4,547.70 and WTI crude rose 1.46% to $85.29, extending gains for a fourth session as fighting around the Strait of Hormuz kept a geopolitical premium in place
- The UAE said it halted trade with Iran after a reported missile strike on its territory; July's FOMC Minutes are due later Wednesday (Thursday 02:00 SGT)
Market snapshot
| Instrument | Level | Change |
|---|---|---|
| USD/JPY | 158.46 | -0.70% |
| EUR/USD | 1.1667 | +0.78% |
| Nikkei 225 (close) | 65,326 | -3.16% |
| Hang Seng (close) | 25,495 | +0.16% |
| Dow futures | 53,557 | +0.29% |
| S&P 500 futures | 7,742.50 | +0.37% |
| Nasdaq 100 futures | 29,577 | -0.03% |
| Gold futures | 4,547.70 | +2.88% |
| WTI crude | 85.29 | +1.46% |
| Bitcoin | 68,567 | +6.01% |
| US 10-yr yield | 4.651% | -5.5bp |
Foreign exchange — Dollar broadly weaker after Treasury buyback surprise
The dollar sold off broadly after the Treasury Department said it would double the size of its long-end liquidity-support buyback operations, driving 10- to 30-year Treasury yields sharply lower. EUR/USD surged to an 11-week high above 1.1650, last near 1.1667 (+0.78% on the day), while GBP/USD pushed to a three-month peak above 1.3600 after UK headline CPI came in at 2.9% y/y in July, in line with estimates, while core CPI rose 2.6% y/y, above the 2.5% expected. USD/JPY slid 0.70% to 158.46, edging toward the prior session's 158.04 low, as falling Treasury yields removed a key prop for the dollar against the yen. Into the NY close, further Treasury-driven yield weakness would keep the dollar on the defensive across G10.
Equities — Wall Street firmer mid-session, Nikkei sinks on risk-off
US equities traded firmer as investors welcomed the Treasury's buyback plan; the Dow added as much as 349 points at one point intraday (the cash session remains open, nothing has closed yet), while Dow, S&P 500 and Nasdaq 100 futures were last +0.29%, +0.37% and -0.03% respectively, leaving the Nasdaq complex little changed. Movers included Marvell (+6%) on an AI chip deal giving Google an option to buy up to $12.2 billion in shares, Moderna (more than doubling) after a late-stage melanoma vaccine win alongside Merck, and Target, which jumped after beating earnings and raising guidance on a tariff-refund boost, while Lowe's flagged a muted outlook on home-improvement spending. In Asia, Japan's Nikkei 225 closed down 3.16% at 65,326 as AI and chip names led a risk-off slide tied to Middle East tensions and the earlier run-up in yields, while Hong Kong's Hang Seng eked out a 0.16% gain to 25,495; South Korea's Kospi tumbled sharply enough to trigger a circuit breaker as broader Asian equities slid. Ahead of the Tokyo open, futures point to a steadier tone if the Treasury-driven yield relief holds.
Macro — Treasury's buyback plan dominates, FOMC Minutes ahead
The Treasury's decision to at least double its long-end buyback operations was the session's dominant macro story, pulling the 10-year Treasury yield down 5.5bp to 4.651% and easing pressure on global sovereign markets. July's FOMC Minutes are due later Wednesday (Thursday 02:00 SGT), with investors watching for the extent of a hawkish split after the meeting reportedly produced three dissents in favor of a rate hike.
Commodities — Gold and oil both extend gains
Gold climbed 2.88% to $4,547.70, moving back above the prior session's $4,434.10 high as falling Treasury yields and a softer dollar drew fresh buying. WTI crude rose 1.46% to $85.29 despite a much larger-than-expected 4.405-million-barrel build in US crude inventories, as fighting around the Strait of Hormuz kept a geopolitical premium in the market for a fourth straight session.
Geopolitics — Hormuz tensions persist, UAE halts trade with Iran
President Trump suggested talks with Iran are ongoing and said oil prices "will be a lot lower" once the war ends, even as fighting around the Strait of Hormuz kept crude on a fourth straight day of gains. The UAE said it was halting trade with Iran after a reported missile strike on its territory, and US embassies issued fresh travel warnings as tensions with Tehran stayed elevated. Trump separately said the US and Canada had reached a tariff deal pending final documents, pausing threatened 50% duties on Canadian goods for three days. In early Asian trade, the Hormuz risk premium remains the key swing factor for oil, gold and the dollar.
Upcoming events
| Time (SGT) | Region | Event | Impact |
|---|---|---|---|
| 08/20 02:00 | US | FOMC Meeting Minutes | High |
| 08/20 09:30 | AU | Employment Change (forecast 11.7K) | High |
| 08/20 09:30 | AU | Unemployment Rate (forecast 4.4%) | High |
| 08/20 20:30 | US | Philly Fed Manufacturing Index (forecast 24.1) | Medium |
| 08/20 20:30 | US | Unemployment Claims (forecast 210K) | Medium |
| 08/21 14:00 | UK | Retail Sales m/m (forecast -0.5%) | Medium |