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Dollar Index slides after Treasury expands longer-dated buybacks

The Treasury said its liquidity support buyback operations in 10-to-20-year and 20-to-30-year nominal coupons would rise to at least $4 billion per operation, running September 9 through November 4.

Reported · Written up by our desk · Major Pairs

The Dollar Index fell 0.86% Wednesday, closing just below 98.80 and at its weakest level since mid-May, after a U.S. Treasury notice on its government bond buyback program triggered broad selling across major currency pairs, according to FXStreet.

The Treasury said it would at least double the size of its liquidity support buyback operations in longer-dated nominal coupons, raising each operation from $2 billion to at least $4 billion for the 10-to-20-year and 20-to-30-year sectors. The change is scheduled to run from September 9 through November 4, with anything beyond that left to the November refunding, and it arrived ahead of a $16 billion auction of 20-year notes.

FXStreet said the move contrasted with central bank-driven expectations, describing it as FX repricing the issuer rather than a rate spread reaction. It pointed to long yields falling because the issuer would need to show up as a bidder, with FX markets pricing the difference within minutes.

The dollar weakness was described as indiscriminate, with the Swiss franc taking close to 1.8% against the dollar, the New Zealand dollar down about 1%, and the Mexican peso moving to a two-year high. In the same session, gold rose toward $4,500 an ounce while silver also climbed, alongside the dollar's broad decline.

Latest closeGold $4,432.00 ▲1.6%|Silver $64.83 ▼0.1%|Dollar index 99.64 ▼0.3%

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