By Karen Brettell and Niket Nishant <\/p>\n
Aug 21 (Reuters) – The dollar slipped on Friday, trading near a three-month low against the euro, as concerns mounted that the U.S. Treasury’s plan to expand buybacks of longer-dated government \u200cdebt could weigh further on the U.S. currency. <\/p>\n
Treasury Secretary Scott Bessent said Thursday he may increase the government’s \u200crepurchases of Treasuries even further, a day after the department surprised markets by pledging to at least double the size of its buybacks of longer-dated \u200bdebt in an effort to rein in bond yields. <\/p>\n
Long-dated yields jumped this week, with the 30-year yield reaching its highest level since 2007. Traders cited concerns over the deteriorating fiscal outlook, heavy issuance, geopolitical risk stemming from the war with Iran, and uncertainty over the Federal Reserve’s policy path. <\/p>\n
Analysts say that holding yields down will simply shift the burden of fiscal concerns onto the currency. \u200cAnd so far the strategy hasn’t achieved its \u2060primary goal, as yields have crept back higher. <\/p>\n
“Bessent’s efforts to suppress U.S. yields haven’t done much for U.S. yields, but it’s undermined the dollar,” said Marc Chandler, chief market strategist at Bannockburn \u2060Global Forex. “The market is pushing back.” <\/p>\n
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.05% to 98.79, with the euro up 0.03% at $1.1682. The single currency earlier reached $1.1711, the highest since May 14. <\/p>\n
Sterling strengthened 0.04% \u200bto $1.3635. \u200bIt reached $1.3675, the highest since February 11. <\/p>\n
Bitcoin, seen as an alternative \u200bto fiat currencies, continued to surge. It was last \u200cup 6.06% at $77,060 after earlier scaling $79,455, the highest since May 15. <\/p>\n
The next test of whether Treasury yields continue to climb may come next Friday, when Federal Reserve Chairman Kevin Warsh delivers a speech at the central bank’s Jackson Hole Symposium. <\/p>\n
Warsh unsettled markets after the Fed’s July meeting by offering few clues on how policymakers might respond to persistent price pressures, when a divided Fed left interest rates unchanged. <\/p>\n
Fed funds futures traders are currently pricing in 35% odds of a September rate hike, rising \u200cto 69% by December. <\/p>\n
YEN FIRMS AFTER INFLATION <\/p>\n
The Japanese yen strengthened 0.14% \u200bto 158.82 per dollar after data showed core consumer inflation had accelerated in \u200bJuly, bolstering the case for a rate hike by \u200bthe Bank of Japan. <\/p>\n
U.S. and Japanese authorities propped up the yen through joint intervention last month, \u200cbut investors say the Japanese currency could resume \u200bits decline unless the BOJ tightens \u200bpolicy. <\/p>\n
“The yen is certainly salvageable, but it’s not a one-way train,” said Roosevelt Bowman, senior investment strategist at Bernstein Private Wealth. <\/p>\n
“Given that growth and inflation have at least firmed somewhat in Japan, if the BOJ policy was seen \u200bas more symmetric, with the central bank \u200cpushing against any inflationary pressures, it would help the yen.” <\/p>\n
Rate increases typically support a currency. The BOJ’s \u200bnext policy meeting is on September 17 and 18. <\/p>\n
(Reporting by Karen Brettell, Niket Nishant and Rae Wee; Editing \u200bby Sonali Paul, Lincoln Feast, Hugh Lawson and Alex Richardson) <\/p>\n","protected":false},"excerpt":{"rendered":"By Karen Brettell and Niket Nishant Aug 21 (Reuters) – The dollar slipped on Friday, trading near a…\n","protected":false},"author":2,"featured_media":821183,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[12383,28,2800,45588,4666,41499],"class_list":["post-821182","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-bond-yields","tag-business","tag-federal-reserve","tag-kevin-warsh","tag-scott-bessent","tag-u-s-treasury"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/821182","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=821182"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/821182\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/821183"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=821182"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=821182"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=821182"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}