The US Dollar has come under significant pressure following recent developments in both US economic data and Treasury policy. According to S&P Global, the preliminary August US Purchasing Managers' Indices (PMIs) are expected to show a mild slowdown in economic activity, with the Manufacturing PMI anticipated to tick down to 53.8 from July’s 53.9 and the Services PMI to ease to 54.0 from 54.6. Despite this expected moderation, both indices remain above the 50 threshold, indicating continued expansion and solid growth in the US private sector. July’s Composite PMI had previously jumped to 54.5 from 51.9, marking the best performance since October 2025, though concerns lingered over manufacturing activity due to supplier delays linked to the Middle East conflict [1].
Market consensus suggests that unless there is a significant miss, the August PMI figures will still reflect healthy growth, supporting the narrative of US economic resilience compared to other developed economies. However, a sharper-than-expected slowdown could heighten investor concerns about the economic outlook, especially in light of a disappointing US Nonfarm Payrolls report earlier in the month. This scenario would likely add further bearish pressure to the US Dollar, which has already been weakened by the US Treasury’s recent announcement to increase purchases of long-term government debt in an effort to address the ongoing bond crisis [1].
The US Treasury’s plan, as confirmed by Treasury Secretary Scott Bessent, involves potentially increasing bond buybacks beyond the $4 billion per operation announced previously. The Treasury had earlier disclosed a strategy to double liquidity for repurchasing long-term securities, aiming to counteract a surge in yields, with the 30-year Treasury Bond yield reaching a 19-year high. This move comes amid growing investor reluctance to purchase US government bonds, as the national debt surpassed $40 trillion earlier in the week. Strategists at BBH describe the plan as a debt-management swap, where older, less liquid bonds are retired in favor of new, more liquid debt. However, BBH experts caution that if investors perceive the Treasury as managing yields rather than liquidity, it could undermine US fiscal credibility and further drag on the US Dollar [2].
In the broader context, the market impact of the upcoming S&P Global PMI release is expected to be significant, particularly if the data deviates sharply from expectations. A positive surprise could bolster confidence in the US economy, though the effect on the US Dollar may be limited unless the deviation is substantial. Conversely, a negative surprise would likely exacerbate existing bearish sentiment towards the currency [1].
CONCLUSION
The US Dollar faces mounting pressure from both anticipated economic data showing a slight slowdown and the Treasury’s aggressive bond buyback strategy. While US PMIs are expected to remain in expansion territory, any significant disappointment could further weaken the currency, especially amid concerns about fiscal credibility and rising government debt. Market participants are closely watching the upcoming PMI release for signals on the US economic outlook and potential currency movements.