WASHINGTON, D.C. / RankWire.AI / – On Thursday, the U.S. dollar maintained its position close to a three-month low, driven by a continued retreat in long-term Treasury yields. The dollar index hovered around 98.81 against six major currencies. Meanwhile, the euro appreciated to approximately $1.1676, reaching its highest point since late May. The Japanese yen also gained, trading near 158.45 per dollar. Investors continued to interpret new U.S. Treasury measures alongside the latest Federal Reserve meeting record.
The U.S. Treasury Department announced plans to expand liquidity-support buybacks for longer-dated government securities. The maximum purchase amount will increase from $2 billion to $4 billion for qualifying operations. This initiative applies to nominal coupon securities with maturities between 10 and 20 years, as well as those between 20 and 30 years. The larger transactions are set to commence on September 9 and continue through November 4, marking the conclusion of the current quarterly refunding period.
Following the announcement, long-term Treasury yields fell. The 30-year yield traded near 5.18% on Thursday, having sharply declined in the previous session. Earlier this week, it reached 5.337%, the highest level since 2007. Treasury yields significantly influence global currency and bond markets because they determine returns on dollar-denominated assets. Additionally, the U.S. Treasury Department plans to publish an updated tentative schedule for the expanded buyback operations.
Major currencies rise as the dollar weakens
The decline of the dollar supported gains among several leading currencies during Asian trading. The sterling traded around $1.3604 and stayed near a three-month high. The Swiss franc strengthened to about 0.7999 per dollar. The euro maintained its position above $1.16, building on gains from the previous trading session. The yen moved further away from the 160-per-dollar level it recently approached. Meanwhile, the dollar index stayed below 99, near its weakest point since May.
Minutes from the Federal Reserve’s July 28 and 29 meetings revealed that policymakers remained concerned about persistent inflation. The federal funds target range was kept at 3.5% to 3.75%. Nine policymakers favored keeping rates steady, while three supported a quarter-point increase. The Fed also indicated that economic activity continued to expand at a solid pace, with inflation still above the 2% goal, maintaining price pressures as a central focus of policy deliberations.
Disagreements emerge over interest rate paths in Fed minutes
At the July meeting, several policymakers expressed readiness to support an interest rate hike, noting that higher rates might be necessary if inflation did not trend toward the 2% target. The central bank continued its existing policy regarding reserves within the financial system, as well as 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 reflect lower long-term yields and newly released U.S. policy details. The dollar index remains near levels seen about three months ago. The 30-year Treasury yield stayed below the 19-year high achieved earlier this week. Expanded government bond buybacks will commence in September, while the federal funds target range remains unchanged. These developments continue to influence trading across foreign exchange markets and U.S. government debt markets on Thursday.