Dollar heads for second monthly loss after Treasury buyback plan

The dollar is on track for a second consecutive monthly decline as US plans to accelerate government-debt buybacks weighed on the currency.

The Bloomberg Dollar Spot Index has fallen 0.9% in August after declining 1.3% in July. The measure has dropped in five of the first eight months of the year and is on its longest losing streak since February.

Treasury Secretary Scott Bessent surprised markets earlier this month by saying the government could step up bond purchases. The plan prompted hedge funds, asset managers, and other speculators to cut bullish dollar positions, Bloomberg reported.

Wells Fargo strategist Erik Nelson said the dollar could weaken further in September if the Federal Reserve does not deliver the rate increases markets have priced in.

The index fell 0.2% Monday after rising Friday, when Federal Reserve Chair Kevin Warsh reaffirmed the central bank’s 2% inflation target. Investors are pricing in a greater than 50% chance of a rate hike in September, while Friday’s jobs report is the next major data point.