NEW YORK: The US dollar edged up on Monday, coming off its third weekly decline in four that sent the greenback to three-month lows as the US Treasury promised to buy back more long-dated bonds, while details of sanctions on Iran were awaited.
After last week’s announcement by the Treasury Department that it would double the size of liquidity support buyback operations for longer-dated notes and bonds, CNBC reported on Monday, citing two senior Treasury officials, that Secretary Scott Bessent could tap the department’s near USD1 trillion General Account to help fund bond buybacks, instead of issuing short-term bills.
The dollar pared some gains after the report, along with longer-dated Treasury yields.
The dollar index, which measures the greenback against a basket of currencies, rose 0.11 percent to 98.94, with the euro down 0.07 percent at USD1.1671.
Long-end yields have been climbing around the globe due to a combination of a solid economic growth outlook, expectations for rising inflation and concern about swelling sovereign debts, while the Treasury buyback expansion to relieve upward pressure on yields has fueled concerns the dollar will weaken as a result.
Trade tensions weighed on the Canadian dollar, which weakened 0.41 percent, its biggest drop since June 17, versus the greenback to CD1.382 per dollar and was on track to snap a three-day streak of gains, after Washington imposed 50 percent tariffs on Canadian goods, with Canada promising to retaliate “dollar for dollar” on the new levies.
US President Donald Trump said in a social post on Monday that tariffs on all cars and trucks, automotive parts and steel will be increased to 50 percent starting January 1, 2027. Sterling edged up 0.03 percent to USD1.3644, holding near its six-month high of USD1.3675 hit on Friday. The Japanese yen softened 0.11 percent against the greenback to 159.13 per dollar.
In cryptocurrencies, bitcoin gained 1.67 percent to USD78,696.12 after registering its largest weekly gain in nearly 3-1/2 years.
Bessent is due to hold a press conference at 1700 GMT after threatening “the toughest sanctions in history” on Iran, with markets eyeing whether he will target China.
US economic data this week includes the personal consumption expenditures price index, personal income and spending, consumer confidence and the second estimate of second-quarter economic growth.