US Treasury warns of potential enforcement actions against financial institutions trading with Iran, bolstering the dollar’s safe-haven appeal.
The US Dollar Index (DXY) climbed for a second day, trading near 99.00 in Asian hours as escalating geopolitical tensions drove demand for the greenback. The move follows expanded US secondary sanctions on entities trading with Iran, with Treasury Secretary Scott Bessent signaling possible enforcement actions against major financial institutions this week, including Chinese firms.
The dollar’s gains come despite the US Treasury’s plan to double buyback operations for longer-dated bonds, potentially using up to $1 trillion from the Treasury General Account. This could influence market liquidity and yields, capping further upside. Investors are also eyeing key US economic data, including Tuesday’s consumer confidence report and Wednesday’s PCE price index, ahead of Fed Chair Kevin Warsh’s speech at Jackson Hole on Friday.
Market focus remains on the interplay between geopolitical risks and monetary policy signals, with the dollar’s trajectory hinging on both external tensions and domestic inflation trends.