Dollar Slumps Amid Debt Worries and Global Yield Rise

The US dollar is trading near multi-month lows due to concerns over debt and the impact of the US Treasury's plan to buy back long-dated bonds. The Canadian dollar slipped 0.3% in Asia trade after trade talks with the US collapsed, while the Australian and New Zealand dollars traded near three-month highs.

The euro remained above $1.16 at $1.1680, while the yen stayed strong around 159 per dollar. Long-end yields have been rising globally due to solid economic growth, inflation expectations, and worries about ballooning sovereign debts.

Analysts at Goldman Sachs said that by attempting to hold down longer-duration securities, the US Treasury is leaving the dollar as the 'remaining release valve' to encourage foreign inflows to finance the US current account. This has spooked traders and hit the dollar hard.