The Treasury Department’s surprise move to double long-term bond purchases triggered a 0.9% drop in the USD Index to a three-month low.
The US Dollar Index fell 0.9% to 98.80 on Wednesday after the Treasury announced plans to double long-dated debt buyback operations, aiming to bolster market liquidity. The move caught investors off guard, pushing the 30-year Treasury yield down nearly 2% and the 10-year yield 1.4% lower.
The USD Index hit its lowest level since mid-May, underperforming against major currencies, particularly the Swiss Franc. The decline followed a sharp rise in Treasury yields earlier in the week, with the 30-year yield reaching a 19-year high on Tuesday.
Markets are now assessing the Fed’s July meeting minutes, which revealed divisions among policymakers, with some favoring immediate rate hikes to curb inflation. The USD remains under pressure but retains defensive appeal amid policy uncertainty.