Dollar Slumps Amid Bond Purchases and Fed Rate Hike Fears
The US dollar hit a three-month low against the euro on August 21 amid concerns over the expanding purchase of long-term U.S. government bonds by investors.
US Treasury Secretary Scott Bessent said that the government could increase the volume of Treasury bond purchases, but this move had little impact on US bond yields and instead undermined the dollar.
The euro reached a three-month high of $1.1711, its highest level since May 14, while the Japanese yen strengthened to 159.01 per dollar following data showing an acceleration in Japan's core inflation.
Market analysts are closely watching the upcoming speech by Fed Chair Kevin Warsh at the central bank symposium in Jackson Hole, with a predicted probability of a Fed rate hike in September at 40% and in December at 72%.