WASHINGTON, D.C. / RankWire.AI / – On Thursday, the U.S. dollar hovered close to a three-month minimum as yields on long-term Treasuries continued to fall. The dollar index hovered around 98.81 against six major currencies. The euro appreciated to approximately $1.1676, reaching its highest point since late May. Meanwhile, the Japanese yen also strengthened, trading near 158.45 per dollar. Investors continued to interpret the implications of new U.S. Treasury measures alongside the latest Federal Reserve meeting record.
The U.S. Treasury Department announced plans to expand liquidity-support buybacks for longer-term government debt. 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. The larger-scale buybacks are set to commence on September 9 and will run through November 4, marking the end of the current quarterly refunding cycle.
Following the announcement, yields on long-term Treasuries declined. The 30-year yield traded near 5.18% on Thursday after experiencing a sharp drop in the previous session. Earlier this week, it reached 5.337%, the highest level since 2007. Since Treasury yields influence global currency and bond markets by impacting returns on dollar assets, this move had broad implications. The U.S. Treasury also intends to publish a revised tentative schedule for the expanded buyback program.
Major currencies rally as the dollar weakens
The weakening dollar buoyed several key currencies during Asian trading hours. The British pound traded around $1.3604 and remained close to a three-month peak. The Swiss franc appreciated to roughly 0.7999 per dollar. The euro held above $1.16 after gaining ground in the previous session. The yen also moved further away from the recent 160-per-dollar level. Meanwhile, the dollar index stayed below 99, approaching its lowest since May.
Minutes from the Federal Reserve’s July 28 and 29 meetings revealed that policymakers remained focused on persistent inflation. The federal funds target rate was maintained at 3.5% to 3.75%. Out of nine policymakers, all supported holding rates steady, while three favored an increase of a quarter-point. The Federal Reserve also indicated that economic activity continued to grow at a solid rate. With inflation still above the bank’s 2% goal, price pressures continue to be a key part of policy considerations.
Disagreements over interest rate policies emerge in Fed minutes
At the July meeting, several policymakers expressed openness to raising interest rates. Many suggested that higher rates might be necessary if inflation did not move toward the 2% target. 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 Federal Reserve’s next policy gathering is scheduled for September 15 and 16.
The recent currency movements reflected both the decline in long-term yields and new U.S. policy disclosures. The dollar index hovered near levels seen approximately three months ago. The 30-year Treasury yield remained below the 19-year high reached earlier this week. The expanded government bond buyback operations will start in September, with the federal funds rate target range remaining unchanged. These developments continued to influence trading in foreign exchange and U.S. government debt markets on Thursday.