The U.S. Dollar Index has fallen below the key 99.00 level, trading around 98.88 as investors grow increasingly concerned about the U.S. fiscal trajectory. Federal debt has now surpassed $40 trillion, while the federal deficit is approaching $1.8 trillion. Last week, the U.S. Treasury announced it would double long-end bond buybacks to $4 billion per operation, a move intended to support liquidity and ease pressure on long-term yields. Instead, the intervention rattled investors and reinforced fears of currency debasement.
Marc Ostwald, chief economist at ADM Investor Services International, said: “The more Bessent tries to push back, the more markets will push against him.” He added that investors are rotating toward gold and bitcoin as they seek alternatives to G7 government bonds and U.S. dollar assets. Bitcoin recorded its largest weekly gain against the dollar in nearly three and a half years, while gold also climbed sharply.
Broader currency moves underscored the dollar's weakness. The euro traded near $1.1665, sterling held near $1.3628, and China’s yuan hovered near a three-and-a-half-year high against the dollar. Meanwhile, Canada’s dollar weakened after the U.S. imposed 50% tariffs on $20 billion of Canadian goods, with Canada announcing retaliatory tariffs from September 8. Markets are now focused on Federal Reserve Chair Kevin Warsh’s speech at Jackson Hole, possible new Iran sanctions, and upcoming economic data. Technical support for the DXY is seen near 98.50 and 98.00, while a move above 99.50 would signal renewed dollar strength.
