Forex
Dollar Plunges as US Treasury Boosts Buybacks
The US dollar suffered its worst day in two and a half months on Tuesday as the US Treasury announced plans to boost liquidity by increasing buybacks of long-dated bonds.
The dollar index, DXY, fell to a 2.5-month low, down 0.76% for the day. The decline was driven by lower T-note yields and the Treasury's decision to double its maximum liquidity support buyback operations for longer-dated nominal coupon sizes to $4 billion per operation, effective September 9.
The yen, on the other hand, rallied to a one-week high against the dollar after the US Treasury's announcement. The yen also found support from Japanese economic news, which showed that core machine orders rose more than expected in June.