Treasury buyback plan weakens dollar

The U.S. dollar fell to a three-month low against the euro on August 21, 2026, as markets reacted to the Treasury Department's plan to expand buybacks of longer-dated government debt. Treasury Secretary Scott Bessent indicated on Thursday that the government may increase its repurchases of Treasuries further, following a surprise pledge to at least double the size of buybacks in an effort to rein in bond yields. However, long-dated yields jumped this week, with the 30-year yield reaching its highest level since 2007, as traders cited concerns over the deteriorating fiscal outlook, heavy issuance, geopolitical risk from the war with Iran, and uncertainty over the United States — Federal Reserve's policy path. Analysts noted that suppressing yields may shift fiscal concerns onto the currency, and the strategy has not yet achieved its primary goal. The dollar index fell 0.05% to 98.79, while the euro rose to $1.1682, its highest since May 14. Sterling also strengthened to $1.3635, its highest since February 11. Bitcoin surged 6.22% to $77,178, reaching its highest since May 15. The Japan — Japanese yen firmed to 159.01 per dollar after data showed core inflation accelerated in July, bolstering expectations for a Japan — Bank of Japan rate hike. Market attention now turns to United States — Federal Reserve Chairman Kevin Warsh's speech at the Jackson Hole Symposium next Friday, with traders pricing in a 40% chance of a September rate hike and 72% for December.