WASHINGTON, D.C. / RankWire.AI / – On Thursday, the U.S. dollar hovered close to a three-month low as long-term Treasury yields continued their decline. The dollar index hovered around 98.81 against six major currencies. The euro increased to roughly $1.1676, reaching its highest point since late May. The Japanese yen also gained, trading near 158.45 per dollar. Markets kept analyzing new U.S. Treasury measures alongside the latest Federal Reserve meeting record.
The U.S. Treasury Department announced plans to boost liquidity-support buybacks for longer-dated government securities. The maximum purchase amount will increase from $2 billion to $4 billion for qualifying operations. This program applies to nominal coupon securities with maturities between 10 and 20 years, as well as those between 20 and 30 years. These larger transactions will start on September 9 and continue through November 4, marking the end of the current quarterly refunding period.
Following the announcement, long-term Treasury yields fell. The 30-year yield traded near 5.18% on Thursday after a sharp decline in the prior session. Earlier this week, it climbed to 5.337%, the highest since 2007. Treasury yields influence global currency and bond markets because they impact returns on dollar-denominated assets. The U.S. Treasury also plans to release an updated tentative schedule for the expanded buyback program.
Major Currencies Gain as the Dollar Weakens
The dollar’s decline supported several major currencies during Asian trading. The sterling traded around $1.3604, staying near a three-month high. The Swiss franc strengthened to about 0.7999 per dollar. The euro held above $1.16 after gaining from the previous session. The yen moved further from the 160-per-dollar level it recently approached. Meanwhile, the dollar index stayed below 99, close to its weakest point since May.
Minutes from the Federal Reserve’s July 28 and 29 meetings revealed policymakers remained concerned about high inflation. They kept the federal funds target range at 3.5% to 3.75%. Nine policymakers supported maintaining current rates, while three favored a quarter-point hike. The Fed also noted that economic activity continued to grow at a solid rate. Inflation stayed above the 2% goal, keeping price pressures at the forefront of policy discussions.
Federal Reserve Minutes Highlight Rate Disagreements
Some policymakers indicated at the July meeting they were open to raising interest rates. Many suggested that higher rates might be needed if inflation did not move toward the 2% target. The central bank maintained its current approach to reserves in the financial system. It also 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 information. The dollar index stayed near levels seen about three months ago. The 30-year Treasury yield remained below the 19-year high reached earlier this week. Expanded government bond buybacks will start in September, while the federal funds target range remains unchanged. These developments continue to influence trading in foreign exchange and U.S. government debt markets on Thursday.