US Dollar Falls as Treasury Buys Back Long-Term Debt
The US dollar has fallen to a three-month low against the euro after the Treasury Department announced plans to double its buybacks of long-term debt, aimed at soothing bond market jitters.
The announcement triggered a sharp sell-off in the US currency as traders worried about a worsening fiscal picture and potentially higher inflation. The Treasury said it would increase its buyback operations from at least $2 billion to at least $4 billion per operation.
The move was seen as an attempt by the Treasury to steady the bond market, which had been rattled by concerns over the growing US fiscal deficit. However, markets pushed back against the announcement, with yields renewing their climb higher.
Sarah Ying, head of FX strategy at CIBC Capital Markets, said that the Treasury's move was 'testing the market' and the market was fighting back.