The dollar fell to a three-month low against the euro on Friday, August 21, amid investors’ concerns that expanding purchases of long-term U.S. government bonds could increase pressure on the American currency. Reuters reports, UNN writes.
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U.S. Treasury Secretary Scott Bessent said that the government could increase the volume of Treasury bond purchases. The day before, the Treasury announced plans to at least double purchases of long-term debt, attempting to contain the rise in bond yields.
At the same time, yields on long-term U.S. bonds rose this week, while 30-year securities reached their highest level since 2007. Investors are concerned about the deterioration of the U.S. financial position, significant volumes of new borrowing, geopolitical risks, and uncertainty regarding the Federal Reserve’s future policy.
Bessent’s efforts to reduce U.S. bond yields had little impact on U.S. bond yields but undermined the dollar. The market is resisting
The euro reached a three-month high
The euro rose to $1.1711, its highest level since May 14. At the latest trading session, the European currency had risen to $1.1682.
Markets are also paying additional attention to the upcoming speech by Fed Chair Kevin Warsh at the central bank symposium in Jackson Hole. Traders estimate the probability of a Fed rate hike in September at 40%, and in December at 72%.
Meanwhile, the Japanese yen strengthened to 159.01 per dollar following the release of data showing an acceleration in Japan’s core inflation. This strengthened expectations that the Bank of Japan could raise its interest rate at its next meeting on September 17–18.
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