The U.S. dollar index ticked up 0.1% to 99.065 at 02:26 ET (06:26 GMT) after a 0.2% overnight rise, remaining close to the three‑month trough of about 98.5 that was recorded last week. The modest rebound followed Treasury Secretary Scott Bessent’s announcement of expanded U.S. sanctions targeting Iran; the statement warned that countries and businesses continuing to trade with Iran could be excluded from the dollar‑based financial system. Iranian officials responded by pledging retaliation and expressed confidence that their major trading partners would resist Washington’s pressure.
In currency markets, the Japanese yen weakened, with the USD/JPY pair moving 0.2% higher to 159.35 yen. The South Korean won’s USD/KRW pair also edged up 0.2%, while the Indian rupee’s USD/INR rate was largely unchanged. The Australian dollar remained muted against the U.S. dollar.
Minutes from the Reserve Bank of Australia’s August meeting revealed a split among policymakers on whether inflation risks justified another rate hike, underscoring divergent views on domestic monetary policy.
U.S. Treasury yields slipped slightly after reports that the Treasury could draw cash from its roughly $940 billion General Account to fund purchases of longer‑dated debt. This potential financing would complement a plan to double quarterly buybacks of 10‑ to 30‑year securities to $4 billion per operation starting September 10. Despite these actions, yields stayed elevated, continuing to pressure global borrowing costs and limiting the dollar’s capacity to sustain its rebound.
Market participants are now focused on the upcoming July personal consumption expenditures (PCE) price index, due on Wednesday, which serves as the Federal Reserve’s preferred inflation gauge. Additionally, investors await Federal Reserve Chair Kevin Warsh’s speech at the Jackson Hole symposium on Friday for further insight into the central bank’s policy outlook and the recent rise in Treasury yields.