WASHINGTON, D.C. / RankWire.AI / – The U.S. dollar hovered close to a three-month low on Thursday amid ongoing declines in long-term Treasury yields. The dollar index stood around 98.81 against six main currencies. Meanwhile, the euro rose to approximately $1.1676, reaching its highest point since late May, and the Japanese yen appreciated, trading near 158.45 per dollar. Investors continue to assess new Treasury initiatives alongside the latest Federal Reserve meeting record.
The U.S. Treasury Department announced plans to expand liquidity-support buybacks for long-dated government securities. The maximum purchase amount will increase from $2 billion to $4 billion for qualifying transactions. This program applies to nominal coupon securities with maturities between 10 and 20 years, and 20 and 30 years. The larger buybacks are set to commence on September 9 and will run through November 4, coinciding with the end of the current quarterly refunding cycle.
Following this announcement, long-term Treasury yields declined. The 30-year yield traded around 5.18% on Thursday, after experiencing a sharp fall in the prior session. Earlier this week, it rose to 5.337%, marking the highest level since 2007. Treasury yields significantly influence global currency and bond markets as they determine returns on dollar-denominated assets. The U.S. Treasury also plans to release an updated tentative schedule for the expanded buyback program.
Major currencies strengthen as the dollar weakens
The dollar’s decline supported gains among several major currencies during Asian trading. Sterling traded near $1.3604 and stayed close to a three-month high. The Swiss franc strengthened to about 0.7999 per dollar. The euro maintained levels above $1.16, building on gains from the previous session. Meanwhile, the yen moved further from the 160-per-dollar level it recently approached. The dollar index, however, remained below 99, near its lowest since May.
Minutes from the Federal Reserve’s July 28 and 29 meeting revealed policymakers’ continued focus on high inflation. The federal funds target range was held steady at 3.5% to 3.75%. While nine policymakers supported maintaining rates, three favored a quarter-point hike. The Fed indicated that economic activity persisted at a robust pace, and inflation remained above the 2% goal, keeping it a key point in policy discussions.
Disagreements emerge among Fed officials over interest rate paths
During the July meeting, several policymakers expressed readiness to support a rate increase if inflation did not trend toward 2%. Many members indicated that higher rates might become necessary. The central bank continued its current approach to reserve management and kept 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 newly released U.S. policy details. The dollar index stayed near levels last seen about three months ago, while the 30-year Treasury yield remained below the 19-year high reached earlier in the week. The upcoming start of expanded government bond buybacks and the unchanged federal funds target range continued to influence trading dynamics across foreign exchange and U.S. debt markets on Thursday.