USD downside risks as Washington hits USD sentiment again

We've obviously had an event for a week with obviously the announcement of the USD bond buyback.

and the upcoming policy steps that are to be announced by Scott Besant.

So let's start with that and your thoughts on the US yields and as well as the fears of another round of USD debasement, please.

Yeah, I think obviously when you get the authorities trying to step in and influence market pricing, the markets very often are skeptical and become concerned about risks of credibility and failure.

And in a way, I can certainly understand this kind of theme that's coming back in terms of US dollar debasement.

The dollar's bounced back a little bit now, but earlier today, the dollar was down by the largest amount over a four-week period, which captures the week in which we had the supposed joint intervention.

And it was a drop of nearly 3%, which was the biggest over that period since the period after Liberation Day, 2025.

And the common theme between those two periods, obviously, is it was instigated by US dollar policy initiatives of some sort.

So it does kind of fuel that perception that there is this kind of underlying wish for the Trump administration to want a weaker dollar.

And given their obsession with wanting trade deficits to shrink, it's obviously pretty consistent with one of the strongest ideological policies that the Trump administration has.

So it's understandable in that sense.

Scott Besant needs to follow up by showing he's doing what basically he was lecturing Japan to do after the intervention that took place towards the end of July on CNBC a few days later.

spoke about the signalling effect of intervention, but that ultimately, for a term to be sustained, it needs a policy change.

So same thing applies in terms of concerns in Washington about rising yields needs to be addressed with policy.

Now, markets are awaiting The policies that he implied were about to be announced yesterday, you know, to address fiscal concerns.

I'm sceptical.

The markets are sceptical that anything of any significance will be announced to address fiscal concerns.

The Republican Party has a six seat majority in the House.

We've got the midterms in November.

Anyway, Trump himself is just not going to go down the road of anything in terms of notable fiscal consolidation.

So we're probably going to get tinkering around the edges in terms of policy initiatives from Scott Besant, you know, agency spending freezes, federal hiring suspension, procurement reviews, tackling fraudulent activities, you know, elements like that that are low hanging fruit to adopt, but will have pretty limited impact.

So the markets are sceptical in terms of what the administration can do.

Of course, he can hint at further buybacks.

He can hint at changes in funding in terms of the tanners.

So there is more that they can do, but it's not going to address the fundamental issue in terms of the fiscal deficit.