FX WRAP: Dollar finishes the week lower despite rebound in US yields

USD was little changed, again failing to track the move higher in US yields, remaining the casualty of the planned increases to the US Treasury buyback operations on the long end. The US Treasury announcement is to be a key topic at next week's Jackson Hole; however, Chair Warsh is likely to navigate the questioning similarly to Daly and Musalem this week, namely, referring to the Fed's dual mandate, independence from fiscal policy, and commitment to 2% inflation. The dollar's correlation to the US 2yr yields and oil prices will be scrutinised early next week given the new wave of US sanctions on Iran that will be announced next Monday. Thus far, Iran is standing firm, claiming the US operation will fail. Elsewhere, USD was muted towards a mixed S&P Global Flash PMI August report, which saw manufacturing miss and services beat. DXY now trades at 98.82 down from last week's close of 99.64. Antipodeans outperformed after China’s Vice Finance Minister pledged additional fiscal policy measures, echoing similar rhetoric from July’s Politburo meeting. The continued rally in precious metals also supported the move higher.  EUR/USD was little changed even with EZ flash PMIs signalling solid Q3 GDP growth, a return to hiring and inflation remaining elevated by historical standards. EUR/USD hit a session high of 1.1711 before retreating to 1.1680.