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Euro rises to three-month highs vs dollar above 1.1700
EUR/USD jumped about 1.1% from Wednesday lows after the Treasury said it would double buyback liquidity support for long-dated securities starting September 9.
The euro extended gains against a softening US dollar, with EUR/USD trading just above 1.1700 and reaching three-month highs. FXStreet attributed the move to a Treasury plan that aims to boost buybacks of longer-dated government bonds.
The US Treasury announced it will double the size of liquidity support buyback operations for longer-dated securities to at least $4 billion per operation, up from a current maximum of $2 billion, starting September 9. The plan is intended to help ease yields on long-term Treasuries that have been under pressure amid rising investor demand for higher compensation after national debt rose above $40 trillion.
Analysts at MUFG said the buyback announcement, along with recent comments tied to Japan’s currency intervention, could prove counter-productive for the dollar by reducing appetite for holding US assets and for selling or exposure to the US dollar. The move also came as Federal Reserve meeting minutes showed policymakers taking a hawkish tone, highlighting the need for higher rate hikes if inflation pressures do not abate, but the Fed messaging did not stop the dollar sell-off.
FXStreet also noted the euro’s central role in global trading, citing 2022 foreign exchange transaction shares and average daily turnover, and reiterated that EUR/USD is the most heavily traded currency pair.
Latest closeEUR/USD 1.157 ▲0.4%