The US Dollar remained near multi-month lows on Monday as investors digested the Treasury’s plans to increase buybacks of long-dated bonds, while markets awaited further details on Iran sanctions and key policy speeches in the US and Japan this week.
Trade tensions continued to pressure the Canadian Dollar, which fell 0.5% to C$1.3836 per US Dollar after Washington imposed 50% tariffs on Canadian goods and Ottawa responded with retaliatory measures.
The Dollar’s broad decline in recent sessions kept the Euro near elevated levels, with the single currency trading slightly lower at $1.1665 but still close to last week’s three-month high.
Sterling was also slightly lower at $1.3628 but remained close to its six-month peak of $1.3675, reached on Friday, whereas the Japanese Yen edged down to 159.25 per Dollar.
Moreover, the greenback suffered its biggest weekly decline against Bitcoin in nearly three and a half years on Sunday, Reuters reports, while losses against gold accelerated amid renewed concerns that efforts by the US to keep bond yields contained could undermine the currency.
Long-term bond yields have been rising globally, driven by expectations of resilient economic growth, higher inflation and growing concerns over mounting government debt.
Last week, after 30-year Treasury yields climbed to near two-decade highs, the US Treasury said it would double the size of its long-end bond buybacks to $4 billion per operation.
While the amount is relatively small compared with the $32 trillion Treasury market, the interventionist move unsettled investors and added to pressure on the Dollar.
The more US Treasury Secretary Scott Bessent tries to intervene, the more aggressively markets are likely to push back.
That dynamic has already been evident over the past week, with gold and Bitcoin attracting strong demand as concerns over currency debasement grow. Investors may increasingly seek to diversify away from G7 government bonds, particularly amid fears that policymakers are failing to address widening budget deficits.
In addition, China’s Yuan, which posted its eighth consecutive weekly gain last week, remained close to a three-and-a-half-year high at 6.7236 per Dollar.
Bessent is scheduled to hold a press conference later on Monday after warning that Washington will impose its “toughest sanctions in history” on Iran. Markets will be closely watching whether the measures could also target China, the largest buyer of Iranian oil.
Investors will also be looking for clues on the outlook for US interest rates when Federal Reserve Chair Kevin Warsh delivers his speech at Jackson Hole, Wyoming, on Friday. Markets are closely watching his remarks for any signals on the Fed’s future policy direction.