WASHINGTON, D.C. / RankWire.AI / – On Thursday, the U.S. dollar remained close to a three-month low, influenced by a decline in long-term Treasury yields. The dollar index hovered around 98.81 against a basket of six major currencies, while the euro rose to approximately $1.1676, its highest since late May. Meanwhile, the yen appreciated to about 158.45 per dollar. Investors also processed new measures in the Treasury market along with details from the Federal Reserve’s latest policy meeting.
The Treasury Department announced increased liquidity-support buybacks for longer-dated U.S. government securities. The maximum purchase amount will be raised from $2 billion to $4 billion for eligible operations. This adjustment applies to nominal coupon securities in the 10-year to 20-year and 20-year to 30-year segments. The expanded buyback operations are scheduled to commence on September 9 and will continue through November 4, the conclusion of the current quarterly refunding period.
This announcement coincided with a significant drop in long-term government bond yields. The 30-year Treasury yield was near 5.18% on Thursday after a decline in the previous session, having earlier peaked at 5.337%, its highest since 2007. Lower yields on Treasury bonds can diminish the relative returns on dollar-denominated debt. The Treasury Department plans to release an updated tentative schedule outlining the expanded buyback operations.
Major currencies strengthen against the dollar
A number of major currencies gained value as the dollar index stayed below 99. The British pound traded near $1.3604, approaching its strongest level in three months. The Swiss franc traded around 0.7999 per dollar. The euro maintained above $1.16 following gains from the previous session. Currency traders also monitored the yen, which recently approached the 160-per-dollar level that market participants are watching closely.
Minutes from the Federal Reserve’s July 28 and 29 meeting revealed ongoing concerns regarding high inflation. Officials maintained the federal funds target range at 3.5% to 3.75%. Nine policymakers supported holding rates steady, while three favored a quarter-point hike. The Federal Reserve indicated that economic activity continued to expand at a solid pace, though inflation remained above the central bank’s 2% goal.
Federal Reserve meeting minutes highlight ongoing rate discussions
The minutes indicated that several policymakers were willing to support higher interest rates in July, with many suggesting that tighter policy might be necessary if inflation did not approach the 2% target. The central bank also continued its approach to managing reserves in the banking system, rolling over principal payments from Treasury securities at auction. The upcoming Federal Reserve policy meeting is scheduled for September 15 and 16.
The recent decline of the dollar occurred alongside falling bond yields and market evaluations of the updated U.S. policy landscape. The dollar index stayed near levels last seen in May, and the 30-year Treasury yield remained below the 19-year high touched earlier this week. The expanded Treasury buybacks are set to start in September, with the key interest-rate range unchanged. These developments continue to influence trading activity across foreign exchange and U.S. government bond markets on Thursday.