Dollar Plummets as US Treasury Boosts Liquidity

The US dollar index plummeted to a 2.5-month low on August 19, dropping by 0.76%. This decline was triggered by the US Treasury's decision to boost liquidity and increase buybacks of long-dated bonds.

The maximum size of the Treasury's liquidity support buyback operations for longer-dated nominal coupon sizes will be at least $4 billion per operation, effective September 9. This move is aimed at supporting the bond market and maintaining economic stability.

The dollar's weakness has led to a rally in the euro, with EUR/USD reaching a 2.5-month high and rising by 0.77%. The yen also gained strength against the dollar, appreciating by 0.83% as Japanese June core machine orders exceeded expectations.