U.S. dollar weakens despite surge in long-term Treasury yields

The U.S. dollar is weakening even as the 30-year Treasury yield trades near its highest level in almost two decades, breaking from the usual pattern in which higher yields support the currency.
The $DXY fell from nearly 102 to below 99 during August, while the Chinese yuan strengthened and the Japanese yen rallied as expectations for tighter Bank of Japan policy increased.
Concerns around roughly $40 trillion in federal debt, expanding deficits and the Treasury's buyback program are adding pressure to the currency as investors demand higher yields to hold long-duration U.S. debt.
The divergence between rising yields and a falling dollar suggests investors may be attaching a larger fiscal-risk premium to U.S. assets. The upcoming jobs report could provide the next major test.