WASHINGTON, D.C. / RankWire.AI / – On Thursday, the US dollar hovered near a three-month low as yields on long-term Treasury bonds continued their decline. The dollar index was around 98.81 when measured against six major currencies. Meanwhile, the euro appreciated to approximately $1.1676, reaching its highest point since late May. The Japanese yen also gained strength, trading close to 158.45 per dollar. Market participants are still processing the new measures announced by the US Treasury and the latest Federal Reserve meeting minutes.
The U.S. Treasury Department announced plans to boost liquidity support through larger buyback operations involving longer-dated government securities. The maximum purchase amount for qualifying operations will increase from $2 billion to $4 billion. These buybacks will cover nominal coupon securities with maturities ranging from 10 to 20 years and 20 to 30 years. The expanded program will commence on September 9 and run through November 4, coinciding with the conclusion of the current quarterly refunding period.
Following this announcement, yields on long-term Treasury securities declined. The 30-year Treasury yield was near 5.18% on Thursday after experiencing a sharp drop in the previous session. Earlier this week, the yield reached 5.337%, the highest level since 2007. These yields are influential in the global bond and currency markets because they directly impact returns on dollar-denominated assets. Additionally, the U.S. Treasury is planning to publish a revised tentative schedule for the upcoming expanded buyback operations.
Major currencies rally as the dollar weakens
The dollar’s retreat supported gains in several key currencies during Asian trading hours. The British pound traded around $1.3604, remaining close to a three-month high. The Swiss franc strengthened to approximately 0.7999 per dollar. The euro continued to hold above $1.16, building on the gains from the previous session. The Japanese yen also moved further away from the 160-per-dollar level it recently approached. Despite these movements, the dollar index stayed below 99 and was near its lowest point since May.
Minutes from the Federal Reserve’s July 28 and 29 meetings revealed that policymakers remain concerned about persistent inflation. The committee maintained the federal funds target range at 3.5% to 3.75%. Nine members favored keeping rates steady, while three supported a quarter-point increase. The Fed also indicated that economic activity continues to expand at a solid pace. Nonetheless, inflation remains above the central bank’s 2% goal, keeping price pressures at the forefront of policy discussions.
Disagreements surface over future interest rate hikes in Fed minutes
At the July meeting, several policymakers expressed readiness to endorse an increase in interest rates if inflation does not move toward the 2% target. Multiple participants suggested that higher rates might become necessary. The central bank maintained its current approach to reserves in the financial system and continued rolling over principal payments from Treasury securities at auction. The Federal Reserve’s next policy gathering is scheduled for September 15 and 16.
The recent currency movements reflected declining long-term yields alongside new policy information from the US. The dollar index remains near levels last seen around three months ago, while the 30-year Treasury yield stayed below its 19-year high from earlier this week. The expanded government bond buybacks will begin in September, with the federal funds target range unchanged. These developments continue to influence trading in foreign exchange and US government debt markets on Thursday.