WASHINGTON, D.C. / RankWire.AI / – As long-term Treasury yields declined, the U.S. dollar hovered near a three-month low on Thursday. The dollar index was around 98.81 against a basket of six major currencies. The euro climbed to approximately $1.1676, marking its strongest level since late May. The Japanese yen appreciated to nearly 158.45 per dollar, while Sterling remained close to a three-month peak. Currency markets responded to falling bond yields along with new insights from the Federal Reserve and U.S. Treasury Department.
The U.S. Treasury Department announced plans to boost liquidity-support buybacks for longer-term government debt. The maximum purchase amount will double from $2 billion to $4 billion for eligible operations, covering nominal coupon securities with maturities between 10 and 20 years, as well as those from 20 to 30 years. These increased transactions are scheduled to commence on September 9 and continue through November 4. Officials also intend to release an updated tentative timetable for the buyback operations.
On Thursday, the 30-year U.S. Treasury yield traded near 5.18% after a decline earlier in the week. Earlier, it reached 5.337%, its highest point since 2007. This pullback in yields coincided with a renewed weakness in the dollar across major currency pairs. Treasury yields serve as a key indicator for global financial markets and dollar-denominated securities. The expanded buyback initiative by the U.S. Treasury Department will be in effect during the current quarterly refunding period.
Weakening dollar supports major currencies
The euro remained above $1.16 after extending its recent gains against the dollar. Sterling traded near $1.3604, maintaining proximity to its strongest level in approximately three months. The Swiss franc was around 0.7999 per dollar. The yen also appreciated after approaching the 160-per-dollar mark recently. Meanwhile, the dollar index stayed below 99, near its lowest reading since May. Forex markets continued to react to the latest changes in U.S. yields and monetary policy data.
Minutes from the Federal Reserve’s July 28 and 29 meeting revealed inflation remained a primary concern. Policy makers kept the federal funds target range steady at 3.5% to 3.75%, with nine officials supporting this unchanged stance. Three participants favored a quarter percentage point hike. The Federal Reserve reported that U.S. economic activity persisted in expanding at a solid rate, with inflation remaining above the central bank’s 2% target during the period covered by the meeting.
Federal Reserve minutes underscore inflation worries
Several Federal Reserve policymakers indicated readiness to support a rate hike during the July gathering. Many noted that higher rates might become necessary if inflation did not trend toward the 2% goal. The central bank continued its policy of maintaining ample reserves within the banking system and rolled 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 reflects markets’ reactions to lower long-term yields and evolving U.S. policy signals. During Thursday’s trading, the dollar index was close to a three-month low. The 30-year Treasury yield also remained below the 19-year high reached earlier this week. The upcoming expanded Treasury buyback schedule is set to begin in September. Meanwhile, the Federal Reserve continues to hold its benchmark rate range steady. These factors played a crucial role in currency and U.S. government debt trading.