WASHINGTON, D.C. / RankWire.AI / – The U.S. dollar hovered close to a three-month low on Thursday, with declining long-term Treasury yields contributing to the move. The dollar index traded around 98.81 against six major currencies. The euro appreciated to roughly $1.1676, hitting its highest point since late May. Additionally, the Japanese yen gained ground, trading near 158.45 per dollar. Investors continued to analyze recent measures from the Federal Reserve and the latest meeting records.
The U.S. Treasury Department announced plans to boost liquidity-support buybacks for longer-dated government securities. The maximum purchase amount will double from $2 billion to $4 billion for qualifying operations. These buybacks will involve nominal coupon securities with maturities between 10 and 20 years, as well as 20 and 30 years. Starting September 9, the increased activity is scheduled to continue through November 4, which marks the conclusion of this quarter’s refunding period.
Following the announcement, long-term Treasury yields fell. The 30-year yield traded near 5.18% on Thursday, after experiencing a sharp decline in the prior session. Earlier this week, it had climbed to 5.337%, the highest since 2007. As yields influence global currency and bond markets by impacting returns on dollar-denominated assets, their movement remains significant. The Treasury Department also intends to publish an updated tentative schedule for the expanded buyback program.
Major currencies rise amid a softer dollar
The weakening of the dollar supported gains among key currencies during Asian trading. The pound traded around $1.3604 and stayed close to a three-month high. The Swiss franc increased to approximately 0.7999 per dollar, and the euro remained above $1.16, building on gains from the previous session. The yen continued to drift away from the 160-per-dollar level that it had recently neared. Meanwhile, the dollar index stayed below 99, approaching its lowest point since May.
Minutes from the Federal Reserve’s July 28 and 29 meetings revealed that policymakers remain focused on persistent inflation. They maintained the federal funds target range at 3.5% to 3.75%. Nine policymakers favored holding rates steady, while three others supported a quarter-point increase. The Fed also indicated that economic activity has continued to grow at a solid rate. With inflation still above the 2% target, price pressures remain central to policy considerations.
Divisions emerge among Fed policymakers over interest rate decisions
Several members of the Federal Reserve signaled at the July meeting that they were ready to support a rate hike. Many participants emphasized that higher interest rates could become necessary if inflation does not move toward the 2% goal. Meanwhile, the central bank maintained its current approach to reserves in the financial system, continuing to rollover principal payments from Treasury securities at auction. The next Federal Reserve policy meeting is scheduled for September 15 and 16.
The recent currency movements reflected lower long-term yields and newly released U.S. policy updates. The dollar index stayed near levels last observed about three months ago, while the 30-year Treasury yield remained below the 19-year high recorded earlier this week. The expanded government bond buyback program will commence in September, with the federal funds target range remaining steady. These factors continued to influence trading across foreign exchange and U.S. government debt markets on Thursday.