WASHINGTON, D.C. / RankWire.AI / – On Thursday, the U.S. dollar hovered close to a three-month low amid further declines in long-term Treasury yields. The dollar index hovered around 98.81 against six major currencies. The euro appreciated to approximately $1.1676, its highest point since late May. Meanwhile, the Japanese yen also appreciated, trading near 158.45 per dollar. Investors continued to interpret recent U.S. Treasury actions alongside the latest Federal Reserve meeting minutes.
The U.S. Treasury Department announced plans to expand liquidity-support buybacks for longer-term government bonds. The maximum purchase amount will increase from $2 billion to $4 billion for qualifying transactions. This program includes nominal coupon securities with maturities ranging from 10 to 20 years and from 20 to 30 years. These larger operations will commence on September 9 and run through November 4, marking the conclusion of the current quarterly refunding cycle.
Following this announcement, long-term Treasury yields saw a decline. The 30-year yield traded near 5.18% on Thursday, after experiencing a sharp drop in the previous session. Earlier this week, yields had climbed to 5.337%, the highest since 2007. Since Treasury yields influence global currency and bond markets, they impact the returns on dollar-denominated assets. The U.S. Treasury also intends to release an updated tentative schedule for the expanded buyback operations.
Major world currencies rise as the dollar weakens
The dollar’s decline supported gains in several major currencies during Asian trading hours. The British pound traded around $1.3604 and approached a three-month high. The Swiss franc strengthened to roughly 0.7999 per dollar. The euro held above $1.16 after gaining momentum in the previous trading session. The yen moved further away from the recently approached 160-per-dollar level. Meanwhile, the dollar index stayed below 99, nearing its lowest point since May.
Minutes from the Federal Reserve’s July 28 and 29 meetings revealed that policymakers remained concerned about persistent inflation. The federal funds target range was maintained at 3.5% to 3.75%. Nine members favored holding rates steady, while three supported a quarter-point increase. The Fed also highlighted that economic activity continued to grow at a solid rate, but inflation staying above the 2% goal kept price pressures central to policy considerations.
Disagreements emerge over interest rate trajectory, Fed minutes show
Several policymakers expressed readiness at the July meeting to support a rate hike if inflation failed to trend toward the 2% target. Many participants indicated that higher rates could be necessary. The central bank maintained its current approach to reserves in the banking system and continued rolling over principal payments from Treasury securities at auction. The Federal Reserve’s next policy meeting is scheduled for September 15 and 16.
The recent currency movements reflected falling long-term yields and new U.S. policy disclosures. The dollar index remained near levels seen about three months ago, and the 30-year Treasury yield stayed below the 19-year high reached earlier this week. The expanded government bond buybacks will begin in September, with the federal funds target range remaining unchanged. These developments continued shaping foreign exchange and U.S. debt markets throughout Thursday.