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Dollar slides to three-month low versus euro on Treasury buyback fears

The move followed a pledge to expand longer-dated Treasury buybacks, as 30-year yields hit their highest level since 2007 and traders grew concerned the fiscal burden would weigh on the currency.

Reported · Written up by our desk · Major Pairs

The U.S. dollar fell to a three-month low against the euro on Friday as traders worried that the U.S. Treasury could expand buybacks of longer-dated debt and further weigh on the currency, according to LiveMint Markets citing Reuters.

Treasury Secretary Scott Bessent said he may increase government repurchases of Treasuries, a day after the department pledged to at least double the size of buybacks of longer-dated debt to rein in bond yields. Long-dated rates jumped this week, with the 30-year yield reaching its highest level since 2007, while analysts warned that efforts to suppress yields may simply shift fiscal concerns onto the dollar.

The dollar index was up 0.01% at 98.80, while the euro rose 0.03% to $1.1682 after earlier reaching $1.1711, its highest level since May 14. Sterling also rose 0.15% to $1.3649 after earlier touching $1.3675, the highest since February 11.

Focus now turns to the next catalyst for rates and the currency outlook, with markets watching Federal Reserve Chairman Kevin Warsh’s speech at the Jackson Hole symposium next Friday. Analysts at TD Securities said any hawkish clarification may offer limited dollar support, while uncertainty on inflation credibility could weigh more materially on the currency.

Latest closeDollar index 99.64 ▼0.3%

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