Dollar Tumbles Against Euro as Treasury's Bond Market Moves Fall Flat
The US dollar suffered its worst decline in three months against the euro on Thursday before recovering slightly after the US Treasury announced measures to calm the bond market.
The Treasury doubled the size of its buybacks of 10- to 30-year debt to at least $4 billion per operation, aiming to steady a market that had been rattled by concerns over the growing US fiscal deficit.
However, markets pushed back against the move, with yields renewing their climb higher. Sarah Ying, head of FX strategy at CIBC Capital Markets, said 'This is (Treasury Secretary Scott) Bessent testing the market and the market fighting back.'
The timing of the announcement caught many investors off guard, coming soon after the Treasury's quarterly refunding statement earlier in August and ahead of a 20-year bond auction.