WASHINGTON, D.C. / RankWire.AI / – The US dollar remained close to a three-month low on Thursday amid declining long-term Treasury yields. The dollar index hovered around 98.81 against six key currencies. The euro climbed to approximately $1.1676, reaching its highest point since late May. Meanwhile, the Japanese yen appreciated, trading near 158.45 per dollar. Market participants continued to interpret new US Treasury actions alongside the recent Federal Reserve meeting minutes.
The U.S. Treasury Department announced plans to scale up liquidity-support buybacks for longer-term government securities. The maximum purchase amount will increase from $2 billion to $4 billion for qualifying operations. This program targets nominal coupon securities with maturities ranging from 10 to 20 years and 20 to 30 years. These larger transactions are scheduled to commence on September 9 and will continue through November 4, marking the conclusion of the current quarterly refunding cycle.
Following the announcement, long-term Treasury yields retreated. The 30-year yield traded near 5.18% on Thursday after experiencing a sharp decline in the previous session. Earlier this week, it reached 5.337%, the highest level since 2007. Treasury yields significantly influence global currency and bond markets by impacting returns on dollar-denominated assets. The U.S. Treasury also plans to release a revised tentative schedule for the expanded buyback operations.
Major Currencies Rise as the Dollar Weakens
The dollar’s decline supported gains in several major currencies during Asian trading. The British pound traded near $1.3604, maintaining levels close to a three-month high. The Swiss franc appreciated to around 0.7999 per dollar. The euro stayed above $1.16, building on prior session gains. The yen also moved further from the 160-per-dollar level it had recently approached. Meanwhile, the dollar index stayed below 99, near its lowest point since May.
Minutes from the Federal Reserve’s July 28 and 29 meetings revealed that policymakers remain concerned about persistent inflation. The committee kept the federal funds rate target between 3.5% and 3.75%. Nine members favored holding rates steady, while three preferred a quarter-point hike. The Fed noted that economic activity continued to grow at a solid rate. Inflation remained above the 2% goal, keeping it at the forefront of monetary policy considerations.
Fed Meeting Minutes Highlight Policy Divisions
Several policymakers at the July session expressed readiness to support a rate hike if inflation showed no signs of decline toward the 2% target. Many participants indicated that further increases could become necessary. The central bank maintained its current approach to reserves within the financial system and continued rolling over principal payments from Treasury securities at auction. The next Federal Reserve policy meeting is scheduled for September 15 and 16.
The recent currency movements reflected the decline in long-term yields and newly released US policy updates. The dollar index stayed near levels seen approximately three months ago. The 30-year Treasury yield remained below the 19-year high recorded earlier in the week. The upcoming start of expanded government bond buybacks in September and the unchanged federal funds target range continue to influence trading in foreign exchange and US debt markets on Thursday.