Dollar struggles for traction as markets weigh Iran sanctions, Treasury buybacks

The US dollar failed to extend its gains against major currencies on Tuesday, according to Business Recorder, as investors digested expanded Iran-related sanctions announced by Treasury Secretary Scott Bessent and new efforts to reduce strain on long-dated Treasury yields. The dollar index, which tracks the greenback against six major rivals, stood marginally lower at 98.96 in Asian trade. The euro was slightly firmer at $1.1668, close to a three-month high reached last week.

The Japanese yen edged up to 159.21 per dollar but remained far below a multi-decade low near 164. The Canadian dollar showed no change at $1.3844, settling after a 0.6% drop the prior session, as Washington threatened higher tariffs on Canadian goods following failed trade talks. Sterling added 0.1% to $1.3639, close to its six-month high.

Bond markets drew some support from a CNBC report that Washington might spend part of its cash reserves on repurchasing longer-maturity debt, a step meant to lower borrowing expenses. Even so, the 2-year note yield held at 4.246% and the 10-year note yielded 4.704%. Traders are now waiting for Federal Reserve Chair Kevin Warsh's debut Jackson Hole address on Friday, looking for clues on bond yields and whether he is seen as independent of the Trump administration.