Forex News: U.S. Dollar Ticks Higher As U.S. Launches Massive

U.S. Dollar Ticks Higher As U.S. Launches Massive Economic Offensive Against Iran

(RTTNews) - The U.S. Dollar value inched higher as investors held back from risky assets as U.S. announces a large-scale economic blockade against Iran aimed at crushing its financial channels. Traders assessed reports indicating that the U.S. Treasury could use the General Account to fund the expanded buybacks of long-term yields.

Today, the U.S. Dollar Index DXY which measures the Greenback against a basket of other major currencies was last seen trading at 98.99, up by 0.19 (or 0.19%).

While against the Euro, the USD was trading at 1.166, up by 0.10%, against the GBP, the USD was trading at 1.363, up by 0.08%.

Against the USD, the Japanese Yen was trading at 159.094, down by 0.08%, the Swiss Franc was trading at 0.802, down by 0.18%; and the Canadian Dollar was trading at 1.384, down by 0.58%.

Against one unit of Australian Dollar, the USD was trading at 0.715, up by 0.27%.

Last week, U.S. President Donald Trump announced plans to unveil a crushing economic operation on Iran on an unprecedented scale.

Trump also warned that any country attempting to offer any form of lifeline to Iran will suffer similar consequences.

Dismissing Trump's threats as a diversionary tactic to shift global attention from the $40 trillion debt the U.S. has, Iran vowed to retaliate against any country that cooperates with the U.S. attempts to exert maximum financial pressure on Iran.

Today, U.S. Treasury Secretary Bessent unveiled "Operation Economic Outcast" aimed to cut off the financial channels supporting Iran's government.

The Office of Foreign Assets Control sanctioned nearly 60 entities, individuals, and vessels that supported Iranian operations.

The OFAC suspended several licenses that authorized remittance payments to Iran and warned of sanctions risk to vessels bowing to Iranian demands to navigate through the Strait of Hormuz.

The OFAC sanctions targeted any person that operates in the Iranian economy in sectors including digital assets, technology, gold, aviation, and shipping.

With plans to impose secondary sanctions on Iran's "enablers", Bessent called for world leaders to choose between the U.S. and Iran.

The announcement has heightened concerns of crude oil-related supply disruption concerns.

After the 10-year and 30-year U.S. government bond yields hit nearly 20-year highs last week, U.S. Treasury surprised investors on August 19 by announcing to double the amount of buyback of longer-dated Treasury Bonds from investors from $2 billion to $4 billion per operation between September 9 and November 4.

Though the long-dated Treasury yields plummeted on the day of announcement, they were up again last Friday.

Today, citing two official sources, CNBC reported that the Treasury could utilize nearly $1 trillion from Treasury's General Account to fund the bond buybacks.

According to the U.S. Federal Reserve, the General Account, which is deposited at the Fed, held $953.6 billion as of August 19.

On the economic front, the Chicago Fed National Activity Index released by the Federal Reserve Bank of Chicago revealed that the index edged down to 0.08 in July from 0.06 in June.

Investors are looking ahead to the upcoming key inflation data release on Wednesday.

Economists are also awaiting the upcoming annual Jackson Hole conference that takes place from August 27 to 29 at Wyoming.

The U.S. Federal Reserve Chair Kevin Warsh will deliver his keynote address on August 28.

Investors seek to derive clues on how the central bank is assessing the economy in the backdrop of recent geopolitical events.

The Fed decided to hold the interest rates in its July month's meeting.

Currently, investors are betting on a 41.90% chance of a 25-basis-point interest rate-hike at its upcoming meeting of the U.S. Federal Reserve on September 15-16 while the odds on rates being held at the current level stand at 58.10%, according to the CME Group's FedWatch Tool.

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