WASHINGTON, D.C. / RankWire.AI / – The U.S. dollar hovered close to a three-month minimum on Thursday, as long-term Treasury yields continued their decline. The dollar index hovered around 98.81 against six major currencies. Meanwhile, the euro appreciated to approximately $1.1676, reaching its highest point since late May. The Japanese yen also appreciated, trading near 158.45 per dollar. Investors continued to process new U.S. Treasury initiatives alongside the latest Federal Reserve meeting minutes.
The U.S. Treasury Department announced plans to boost liquidity-support buybacks for longer-term government securities, increasing maximum purchases from $2 billion to $4 billion for qualifying operations. These buybacks will include nominal coupon securities with maturities between 10 and 20 years and between 20 and 30 years. The expanded program begins on September 9 and runs through November 4, marking the conclusion of the current quarterly refunding cycle.
Following this announcement, long-term Treasury yields declined. The 30-year yield traded around 5.18% on Thursday, after a sharp decrease from the previous session. Earlier this week, it hit 5.337%, the highest since 2007. Treasury yields influence global currency and bond markets, impacting returns on dollar assets. The U.S. Treasury Department also plans to publish an updated tentative schedule for the expanded buyback operations.
Major currencies gain as the dollar weakens
The decline in the dollar supported gains among key currencies during Asian trading. The British pound traded around $1.3604, maintaining a nearly three-month high. The Swiss franc strengthened to approximately 0.7999 per dollar. The euro stayed above $1.16, building on gains from the previous session. The yen also moved further away from the 160-per-dollar level it recently approached. Meanwhile, the dollar index remained below 99, near its lowest point since May.
Minutes from the Federal Reserve’s July 28-29 meeting indicated that policymakers remained concerned about persistent inflation. The federal funds target range was maintained at 3.5% to 3.75%. Nine policymakers supported holding rates steady, while three favored a quarter-point hike. The Fed noted that economic activity continues to expand at a solid rate, with inflation still above the 2% target, keeping price pressures at the forefront of policy considerations.
Policy disagreements highlighted in Fed minutes
Several policymakers signaled readiness to support an interest-rate increase during the July meeting, emphasizing that higher rates might be necessary if inflation does not trend toward 2%. The central bank maintained its current approach to reserves 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 lower long-term yields and new U.S. policy updates. The dollar index remains near levels from about three months ago, and the 30-year Treasury yield stayed below the 19-year high from earlier in the week. The expanded government bond buybacks will commence in September, with the federal funds target range remaining unchanged. These developments continue to influence trading across foreign exchange and U.S. government debt markets on Thursday.