The U.S. dollar hovered near a three-month low on Thursday after the Treasury Department announced plans to increase buybacks of long-dated securities to stabilize turbulent bond markets. The dollar index fell to 98.558, its lowest since mid-May, while the 30-year Treasury yield retreated to 5.198% after touching a 19-year high of 5.337% earlier in the week.
The intervention reassured investors, according to ING's Chris Turner, though traders noted the buybacks do not reduce the underlying U.S. deficit. The euro climbed to $1.1710, and sterling hit a three-month high against the dollar.
Focus now shifts to next week's Jackson Hole Symposium, where new Fed Chair Kevin Warsh may address monetary policy amid markets pricing a 35% chance of a September rate hike. Meanwhile, ECB Chief Economist Philip Lane warned inflation will remain well above target due to the Iran war, with markets pricing a 95% probability of an ECB rate increase in September.