Asian currencies traded mostly flat while the US dollar hovered near multi-month lows, according to Investing.com, as investors weighed US Treasury bond buyback plans against shifting geopolitical tensions and renewed trade risks. The Dollar Spot Index held near 98.83, staying close to its lowest level since mid-May after declining nearly 1% the previous week.
Treasury Intervention and Bond Market Pressures
While the move initially eased yields, it did little to dispel broader concerns over the US debt market, where federal debt has surpassed 40.000 milliards de dollars and the federal deficit approaches 1.800 milliards de dollars.
According to Capital.com analyst Daniela Hathorn, the market movement reflects a reassessment of term premium as investors demand higher compensation to absorb heavy public borrowing and budget uncertainty. This environment has driven long-term borrowing costs higher, with 30-year Treasury yields pushing toward 5,18%.
Global Currency Divergence in Europe and Asia
As the dollar’s yield advantage eroded, major European currencies surged to multi-month highs. According to Investing.com data, the euro climbed toward a three-month peak, on track for its fourth weekly gain, while the British pound hovered near a six-month high backed by firm gilt yields.
Across Asian foreign exchange markets, regional currencies showed mixed performance against the softer greenback:
- Japanese Yen: Edged up 0,1% to trade near 159 per dollar, supported by core consumer price index data showing inflation accelerating, alongside expectations of a Bank of Japan rate hike, according to Investing.com.
- South Korean Won: Outperformed regional emerging market peers, with the USD/KRW pair declining to its lowest level since September 2025, according to market reports.
- Canadian Dollar: Rose 0,2% following the breakdown of trade talks between the United States and Canada, which prompted Washington to impose 50% tariffs on 20 milliards de dollars of Canadian goods and led Ottawa to announce retaliatory measures effective September 8, according to Investing.com.
Energy Markets and Upcoming Sanctions
Oil prices pulled back by more than one dollar per barrel as traders booked profits ahead of expected announcements regarding new US sanctions on Iran. Treasury Secretary Scott Bessent was scheduled to provide details on the measures, which aim to further restrict Iranian petroleum exports and tighten global energy supplies, according to Investing.com.
Despite the profit-taking, persistent commercial shipping disruptions in the Strait of Hormuz kept Brent crude anchored near 92$ per barrel. Federal Reserve policy signals also pointed to continued caution, with minutes from the central bank’s July meeting indicating that policymakers remain open to further rate hikes if inflation stays above the 2% target.
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