WASHINGTON, D.C. / RankWire.AI / – On Thursday, the U.S. dollar hovered close to a three-month low as yields on long-term Treasury securities continued to decline. The dollar index was around 98.81 against six major currencies. Meanwhile, the euro increased to roughly $1.1676, reaching its highest point since late May. The Japanese yen also appreciated, trading near 158.45 per dollar. Investors continued to process new U.S. Treasury measures alongside the latest Federal Reserve meeting minutes.
According to the U.S. Treasury Department, the plan is to expand liquidity-support buybacks for longer-dated government bonds. The maximum purchase amount will increase from $2 billion to $4 billion for eligible operations. This program covers nominal coupon securities with maturities between 10 and 20 years, as well as those between 20 and 30 years. These larger transactions are set to commence on September 9 and will run through November 4, which marks the conclusion of the current quarterly refunding period.
Following this announcement, long-term Treasury yields declined. The 30-year yield traded near 5.18% on Thursday after a sharp drop in the previous session. It had earlier peaked at 5.337%, the highest level since 2007. Yields on Treasury securities significantly influence global currency and bond markets as they impact returns on dollar-denominated investments. The U.S. Treasury also intends to release an updated tentative schedule for the expanded buyback operations.
Major currencies gain as dollar loses momentum
The weakening of the dollar supported gains in several key currencies during Asian trading hours. The sterling traded around $1.3604, remaining near a three-month high. The Swiss franc appreciated to approximately 0.7999 per dollar. The euro stayed above $1.16 after extending gains from the previous session. Additionally, the yen moved further away from the 160-per-dollar level it recently approached. Meanwhile, the dollar index remained below 99, near its lowest point since May.
Minutes from the Federal Reserve’s July 28 and 29 meetings indicated policymakers’ ongoing concerns about persistent inflation. The committee kept the federal funds target range steady at 3.5% to 3.75%. While nine members supported holding rates steady, three favored a quarter-point hike. The Fed also noted that economic activity persisted in expanding at a solid rate, with inflation remaining above its 2% goal, keeping inflation pressures central to the policy debate.
Division among Fed members over rate hikes evident in minutes
During the July meeting, several policymakers expressed their readiness to support a rate increase if necessary. Many argued that higher rates might be required if inflation did not move toward the 2% target. The central bank maintained its current approach to reserves and continued rolling over principal payments from Treasury securities at auctions. The Federal Reserve’s next policy gathering is scheduled for September 15 and 16.
The recent currency movements reflected declining long-term yields and fresh U.S. policy updates. The dollar index stayed near levels observed about three months ago, with the 30-year Treasury yield remaining below the 19-year high hit earlier this week. The upcoming start of expanded government bond buybacks in September coincides with an unchanged federal funds target range. These factors continued to influence foreign exchange and U.S. debt markets on Thursday, shaping trading activity across the board.