Dollar slides as Treasury acts to calm bond market turmoil

The US dollar experienced a significant drop, reaching a three-month low, on Thursday as the Treasury Department intervened to stabilize the bond market. The Treasury's buyback of securities with maturities between 10 and 30 years was aimed at reassuring markets that long-term bonds would not face a disorderly selloff, which had previously pushed yields to their highest level since 2007.

This move reduced some concerns about the sustainability of US fiscal policy and the Federal Reserve's commitment to battling inflation, according to analysts. The dollar index fell to 98.558, its lowest level since May 14, while the euro surged to $1.1710, the highest since mid-May. Investors were grappling with a sharp sell-off in global bond markets due to mounting worries about soaring government debt and potential higher oil prices, stemming from the ongoing US-Zionist war with Iran.

The Treasury's intervention aimed to manage long-term rates, as the market questioned the Fed's determination to fight inflation and the sustainability of US fiscal policy. The Jackson Hole Symposium is expected to provide further clues on the Fed's monetary policy outlook under new Chair Kevin Warsh, amid competing influences and the need to steer rates effectively.