WASHINGTON, D.C. / RankWire.AI / – The U.S. dollar maintained a position close to a three-month low on Thursday as yields on long-term Treasury bonds eased. The dollar index fluctuated around 98.81 against a basket of six major currencies. The euro increased to approximately $1.1676, reaching its highest point since late May. Meanwhile, the yen strengthened to about 158.45 per dollar. Investors continued to digest new measures in the Treasury market and details from the Federal Reserve’s latest policy meeting.
The Treasury Department disclosed plans for larger liquidity-support buybacks involving longer-dated U.S. government securities. The maximum purchase amounts will increase from $2 billion to $4 billion for qualifying operations. This adjustment applies to nominal coupon securities within the 10-year to 20-year and 20-year to 30-year sectors. The expanded buyback operations are scheduled to commence on September 9 and will run through November 4, marking the conclusion of the current quarterly refunding period.
The announcement coincided with a significant decline in long-term government bond yields. On Thursday, the 30-year Treasury yield hovered around 5.18% after decreasing during the previous session. Earlier this week, it reached 5.337%, the highest since 2007. Lower Treasury yields can diminish the relative returns on dollar-denominated debt. The Treasury Department is expected to release an updated tentative schedule outlining the expanded buyback operations.
Major currencies strengthen versus the dollar
Several key currencies gained strength as the dollar index remained below 99. The British pound traded near $1.3604, approaching its strongest level in three months. The Swiss franc was exchanged at approximately 0.7999 per dollar. The euro maintained levels above $1.16 after extending gains from the previous trading session. Currency markets also monitored the yen, which recently moved close to the 160-per-dollar level, a threshold closely watched by traders.
Minutes from the Federal Reserve’s July 28 and 29 meetings revealed ongoing concerns about elevated inflation. Policymakers kept the federal funds target range steady at 3.5% to 3.75%. Nine officials supported holding rates steady, while three favored a quarter-point hike. The Federal Reserve indicated that economic activity continued to expand at a solid pace and acknowledged that inflation remained above its 2% goal.
Federal Reserve meeting minutes highlight rate concerns
The record of the meeting showed several policymakers were ready to endorse higher interest rates in July. Many participants expressed that more restrictive policies could become necessary if inflation failed to move toward the 2% target. The central bank maintained its approach to banking system reserves by rolling over principal payments from Treasury securities at auction. The next scheduled Federal Reserve policy meeting is set for September 15 and 16.
The recent decline in the dollar coincided with falling bond yields and market assessments of the updated U.S. policy environment. The dollar index stayed near levels seen in May, while the 30-year Treasury yield remained below the 19-year high reached earlier this week. With expanded Treasury buybacks set to begin in September and the benchmark interest rate range holding steady, these developments continued to influence trading across foreign exchange and U.S. government bond markets on Thursday.