WASHINGTON, D.C. / RankWire.AI / – On Thursday, the U.S. dollar remained near a three-month low as long-term Treasury yields declined. The dollar index hovered around 98.81 against a basket of six key currencies. The euro climbed to approximately $1.1676, reaching its highest point since late May. Meanwhile, the yen strengthened to about 158.45 per dollar. Investors absorbed new measures in the Treasury market along with details from the Federal Reserve’s latest policy meeting.
The Treasury Department announced increased liquidity-support buybacks for longer-term U.S. government securities. The maximum purchase size will grow from $2 billion to $4 billion for eligible transactions. This change affects nominal coupon securities in the 10-year to 20-year and 20-year to 30-year ranges. The expanded operations will begin on September 9 and run through November 4, marking the end of the current quarterly refunding cycle.
This announcement coincided with a notable drop in long-term government bond yields. The 30-year Treasury yield was near 5.18% on Thursday after falling during the previous session. Earlier in the week, it hit 5.337%, the highest since 2007. Lower Treasury yields can reduce the relative returns on dollar-denominated debt. The Treasury Department plans to release an updated tentative schedule for the larger buyback operations.
Major currencies strengthen against the dollar
Several leading currencies appreciated as the dollar stayed below the 99 mark on its index. The British pound traded near $1.3604, close to its highest in three months. The Swiss franc was around 0.7999 per dollar. The euro maintained gains above $1.16 after extending its rally from the previous session. Currency markets also monitored the yen, which recently approached the 160-per-dollar level that traders watch closely.
Minutes from the Federal Reserve’s July 28 and 29 meeting revealed ongoing concerns about high inflation. Policymakers kept the federal funds target range steady at 3.5% to 3.75%. Nine officials supported keeping rates unchanged, while three favored a quarter-point hike. The Fed said economic activity still expanded at a solid pace. Officials also noted inflation remains above the bank’s 2% goal.
Federal Reserve Meeting Highlights Rate Discussions
The record from the meeting showed some policymakers were ready to support higher interest rates in July. Many indicated tighter policy might be necessary if inflation didn’t move toward 2%. The central bank maintained its reserve approach in the banking system. It continued rolling over principal payments from Treasury securities at auction. The next Federal Reserve policy meeting is scheduled for September 15 and 16.
The dollar’s recent dip coincided with falling bond yields and market assessment of U.S. policy shifts. The dollar index stayed near levels last seen in May. The 30-year Treasury yield also remained below the 19-year high reached earlier this week. The expanded Treasury buybacks are set to begin in September, while the key interest-rate range remains steady. These developments continue influencing trading in foreign exchange and U.S. government bonds on Thursday.