WASHINGTON, D.C. / RankWire.AI / – On Thursday, the U.S. dollar hovered close to a three-month low as yields on long-term Treasury bonds decreased. The dollar index was approximately at 98.81 against a basket of six major currencies. The euro gained to roughly $1.1676, reaching its highest point since late May. Meanwhile, the Japanese yen appreciated to nearly 158.45 per dollar. The British pound also remained near a three-month peak. Currency markets responded to lower bond yields along with fresh updates from the Federal Reserve and U.S. Treasury Department.
The U.S. Treasury Department announced plans to increase liquidity support buybacks for longer-term government debt. The maximum purchase amount will double from $2 billion to $4 billion for qualifying operations. This increase applies to nominal coupon securities with maturities between 10 and 20 years, as well as those between 20 and 30 years. These larger transactions are scheduled to begin on September 9 and continue through November 4. Treasury officials also intend to publish an updated tentative schedule for these operations.
The 30-year U.S. Treasury yield traded around 5.18% on Thursday after declining in the previous session. Earlier in the week, it reached 5.337%, marking its highest level since 2007. The retreat in yields was accompanied by renewed dollar weakness across major currency pairs. Treasury yields are a crucial indicator for global financial markets and dollar-denominated securities. The expanded buyback program from the U.S. Treasury will be active during the current quarterly refunding period.
Weakening dollar bolsters major currencies
The euro remained above $1.16 after extending its recent gains against the U.S. dollar. Sterling traded near $1.3604 and stayed close to its highest in about three months. The Swiss franc was around 0.7999 per dollar. The yen also appreciated after approaching the 160-per-dollar level recently. Meanwhile, the dollar index stayed below 99, near its weakest point since May. Forex markets continued to mirror the latest shifts in U.S. yields and monetary policy data.
Minutes from the Federal Reserve’s July 28 and 29 meetings revealed that inflation remained a key concern. Policymakers kept the federal funds target range unchanged at 3.5% to 3.75%. Nine officials supported maintaining the current range, while three favored an increase of a quarter percentage point. The Fed also reported that U.S. economic activity continued to expand at a solid pace. Inflation remained above the Fed’s 2% target during the period covered by the meeting.
Federal Reserve Minutes Emphasize Inflation Risks
Several Fed policymakers signaled readiness to support a rate hike at the July meeting. Many argued that higher rates could become necessary if inflation did not trend toward 2%. The central bank maintained its approach of keeping ample reserves in the banking system. It also continued rolling over principal payments from Treasury securities at auction. The Federal Reserve’s next scheduled monetary policy meeting is set for September 15 and 16.
The recent dollar performance reflects markets’ reactions to lower long-term yields and new U.S. policy signals. During Thursday’s trading, the dollar index stayed near a three-month low. The 30-year Treasury yield also remained below the 19-year high recorded earlier this week. Treasury buybacks will expand in September according to the announced schedule. Meanwhile, the Federal Reserve maintains its benchmark rate range at current levels. These factors continue to influence currency and U.S. government debt trading dynamics.