# US Dollar Slips to Mid-June Lows as Treasury Doubles Bond Buybacks and Scotiabank Warns of Debasement

> The US Dollar faces renewed downside pressure following the US Treasury's unexpected decision to double its bond buyback program. Scotiabank strategists suggest fiscal sustainability concerns could drag the DXY down an additional 1 to 1.5 percent.

**Type:** article · **Category:** Market · **Published:** 2026-08-21 · **Source:** TrendKia
**Canonical:** https://trendkia.com/en/market/us-treasury-ki-ghoshana-ke-bada-scotiabank-ne-jatai-dollar-debasement-ki-ashnka-19325 · **Language:** English
**Tags:** US Dollar, Scotiabank, Treasury Bonds, Bond Buyback, Federal Reserve, Cryptocurrency, Gold

The US Dollar has touched its lowest level since mid-June as financial markets absorb the US Treasury Department's surprise decision to double its bond buyback operations. According to analysis from Scotiabank strategists Shaun Osborne and Eric Theoret, the intervention underscores deepening market skepticism regarding US fiscal sustainability and the Federal Reserve's long-term inflation resolve. As investors revisit the dollar debasement trade, the US Dollar Index (DXY) faces the prospect of dropping an additional 1 to 1.5 percent in the near term amidst steepening yield curves and mixed global asset performance.

## Unprecedented Schedule Shift in Treasury Liquidity Operations
The US Treasury Department altered its standard operational calendar on Wednesday at 12:32 GMT by announcing a significant expansion of its liquidity support buybacks. Under the updated framework, maximum purchase limits for operations in the 10-year to 20-year and 20-year to 30-year maturity sectors will increase from $2 billion per operation to at least $4 billion. These enlarged buyback operations are scheduled to take effect from September 9 through November 4. The timing caught market participants off guard, arriving just two weeks after the Treasury's quarterly refunding announcement and merely hours prior to a scheduled 20-year Treasury bond auction.

## Yield Control Strategy and the Dollar Debasement Narrative
Scotiabank strategists contend that the Treasury's aggressive stance aims to temper upward pressure on long-dated yields. Investors have grown increasingly cautious about sovereign debt issuance and the Federal Reserve's commitment to curbing inflation. When Treasury yields cannot absorb the strain of expanding debt supply and shifting inflation expectations, the currency acts as the primary adjustment mechanism. From a technical chart perspective, the DXY has broken below the 50 percent retracement mark of its first-half gains, opening a path toward further downward momentum of 1 to 1.5 percent in upcoming sessions.

## Federal Reserve Policy Path and September Rate Hike Expectations
Insights from the July Federal Open Market Committee (FOMC) meeting minutes indicated that many officials considered further policy tightening necessary should inflation fail to cool consistently. However, recent macroeconomic indicators tell a more nuanced story. Moderating price pressures alongside subtle cooling in the labor market suggest that the actual risk of a rate hike at the September meeting remains lower than current market pricing implies. Financial markets currently price in a slightly higher than 30 percent probability of a September rate increase, but underlying economic trends favor a more cautious stance from the central bank.

## Cross-Asset Movements in Currencies, Commodities, and Crypto
Reactions across broader financial markets reflected shifting sentiment following the Treasury's announcement. The British Pound against the US Dollar (GBP/USD) retained positive territory on Thursday despite trimming earlier gains to trade near the 1.3630 region. Meanwhile, EUR/USD experienced slight profit-taking, sliding to around 1.1670 after previously breaching the 1.1700 threshold. In commodities, spot gold experienced a technical pull-back below the $4,500 per troy ounce mark. Conversely, digital assets surged, with Bitcoin (BTC) breaking above $70,000, Ethereum (ETH) sustaining levels over $2,200, and Ripple (XRP) recovering beyond $1.15. Concurrently, the 10-year US Treasury yield stabilized at 4.672 percent after Wednesday's volatile swing.

## What this means for you
**Across India:** Softness in the US Dollar can provide stability to the Indian Rupee, potentially dampening imported inflation and energy import costs.

**For Global Investors:** Potential debasement pressures on the Greenback favor hard assets and digital currencies, influencing international asset allocation strategies.

## Questions & Answers

### 1. What decision did the US Treasury make regarding bond buybacks?
The US Treasury announced it is doubling the size of its liquidity support bond buybacks for 10-to-30-year maturities from $2 billion to at least $4 billion per operation between September 9 and November 4.

### 2. What is Scotiabank's forecast for the US Dollar Index (DXY)?
Scotiabank strategists Shaun Osborne and Eric Theoret warn that debasement concerns could drive the DXY down by an additional 1 to 1.5 percent in the near term.

### 3. How did cryptocurrencies react to the Treasury buyback news?
Cryptocurrencies extended gains, with Bitcoin (BTC) climbing above $70,000, Ethereum (ETH) holding over $2,200, and Ripple (XRP) recovering above $1.15.

### 4. What is the market expectation for a Federal Reserve rate hike in September?
Market-implied probabilities suggest a bit more than a 30 percent chance of a September rate hike, though recent inflation and labor data point to a lower actual risk.

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