WASHINGTON, D.C. / RankWire.AI / – On Thursday, the U.S. dollar hovered near a three-month low amid declining long-term Treasury yields, with the dollar index around 98.81 against a basket of six major currencies. The euro appreciated to approximately $1.1676, marking its strongest level since late May, while the Japanese yen increased to nearly 158.45 per dollar. Sterling also remained close to a three-month high. Currency markets reflected the decline in bond yields alongside fresh details from the Federal Reserve and U.S. Treasury Department.
The U.S. Treasury Department announced an increase in liquidity-support buybacks for longer-dated government debt, doubling maximum purchases from $2 billion to $4 billion for eligible operations. The program now 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 begin on September 9 and continue through November 4, with officials planning to release an updated tentative schedule for the operations.
The 30-year U.S. Treasury yield traded near 5.18% on Thursday after experiencing a decline in the previous session, having earlier hit 5.337%, its highest since 2007. This retreat in yields coincided with renewed weakness in the dollar across major currency pairs. Treasury yields remain a vital indicator for global financial markets and dollar-denominated securities, and the Treasury Department’s expanded buyback program will be active during the current quarterly refunding period.
Dollar dips bolster major currencies
Following its recent gains, the euro stayed above $1.16, while sterling traded near $1.3604, maintaining close proximity to its strongest level in about three months. The Swiss franc traded around 0.7999 per dollar, and the yen appreciated after approaching the 160-per-dollar level. Meanwhile, the dollar index remained below 99, near its weakest since May. Foreign exchange markets continued to react to the latest movements in U.S. yields and monetary policy data.
Minutes from the Federal Reserve’s July 28 and 29 meeting revealed that inflation remained a primary concern. Policymakers kept the federal funds target range steady at 3.5% to 3.75%, with nine officials supporting the current range and three favoring a quarter percentage point increase. The Fed also noted that U.S. economic activity persisted in expanding at a solid pace, with inflation staying above its 2% goal during the period covered by the meeting.
Inflation concerns highlighted in Fed minutes
Several members of the Federal Reserve indicated their readiness to support a rate hike at the July meeting, emphasizing that higher rates might be necessary if inflation fails to move toward the 2% target. The central bank maintained its stance of keeping ample reserves in the banking system and continued rolling over principal payments from Treasury securities at auction. The Federal Reserve’s next scheduled monetary policy meeting is set for September 15 and 16.
The dollar’s recent performance was shaped by markets evaluating lower long-term yields and updated U.S. policy signals. During Thursday’s trading, the dollar index stayed close to a three-month low, while the 30-year Treasury yield remained below the 19-year high reached earlier in the week. The expanded Treasury buyback program will commence in September as per the announced schedule. Meanwhile, the Federal Reserve continues to hold its benchmark rate range steady, and these factors remain central to currency and U.S. government debt trading.