WASHINGTON, D.C. / RankWire.AI / – The U.S. dollar edged close to a three-month low on Thursday, amid continued declines in long-term Treasury yields. The dollar index hovered around 98.81 against six major currencies. The euro climbed to approximately $1.1676, reaching its highest point since late May. Meanwhile, the Japanese yen appreciated, trading near 158.45 per dollar. Market participants kept digesting new measures from the U.S. Treasury and the latest Federal Reserve meeting minutes.
The U.S. Treasury Department announced plans to expand liquidity-support buybacks for longer-dated government bonds. The maximum purchase size will increase from $2 billion to $4 billion for eligible transactions. This program includes nominal coupon securities with maturities between 10 and 20 years and between 20 and 30 years. These larger buybacks will commence on September 9 and run through November 4, marking the conclusion of the current quarterly refunding cycle.
Following this announcement, long-term Treasury yields fell. The 30-year yield traded near 5.18% on Thursday, after a sharp decline in the previous session. Earlier this week, it had peaked at 5.337%, the highest level since 2007. Treasury yields are influential in 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 operations.
Major currencies rise as the dollar weakens
The retreat of the dollar supported gains in several key currencies during Asian trading hours. The sterling traded around $1.3604, holding near a three-month high. The Swiss franc appreciated to about 0.7999 per dollar. The euro remained above $1.16, buoyed by gains from the previous trading session. The yen also moved further from the 160-per-dollar level it recently approached. Meanwhile, the dollar index stayed below 99, near its lowest point since May.
Minutes from the Federal Reserve’s July 28 and 29 meetings revealed that officials remain concerned about persistent inflation. The committee 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 Fed also indicated that economic activity continues to grow at a solid rate. Inflation remains above the Fed’s 2% goal, keeping price pressures central to policy deliberations.
Federal Reserve minutes reveal division over interest rates
At the July gathering, several policymakers expressed readiness to support a rate hike if inflation does not move toward the 2% target. Many participants noted that higher rates might become necessary. The central bank continued its current approach to reserves in the financial system and kept rolling over principal payments from Treasury securities at auction. The upcoming Federal Reserve policy meeting is scheduled for September 15 and 16.
The recent movements in currency markets reflect both declining long-term yields and the release of new U.S. policy details. The dollar index remains near levels last seen about three months ago. The 30-year Treasury yield stayed below the 19-year high recorded earlier this week. The expanded government bond buybacks will begin in September, with the federal funds target range remaining unchanged. These developments continued to influence trading in foreign exchange and U.S. government debt markets on Thursday.