WASHINGTON, D.C. / RankWire.AI / – As long-term Treasury yields decreased on Thursday, the U.S. dollar hovered near a three-month low. The dollar index was around 98.81 when compared against a basket of six major currencies. Meanwhile, the euro reached approximately $1.1676, marking its strongest position since late May. The yen appreciated to about 158.45 against the dollar. Market participants also digested new Treasury market measures along with details from the Federal Reserve’s latest policy meeting.
The Treasury Department disclosed plans to increase liquidity-support buybacks for longer-term U.S. government debt. The maximum purchase amounts will grow from $2 billion to $4 billion for eligible operations. This change affects nominal coupon securities across the 10-year to 20-year and 20-year to 30-year ranges. These expanded operations are scheduled to commence on September 9 and will run through November 4, concluding the current quarterly refunding cycle.
This announcement coincided with a notable decline in long-term government bond yields, with the 30-year Treasury yield near 5.18% on Thursday after a previous dip. Earlier in the week, it reached 5.337%, the highest level since 2007. A drop in Treasury yields can diminish the relative return on dollar-denominated debt. The Treasury Department also intends to publish an updated tentative schedule detailing the larger buyback activities.
Major currencies strengthen against the dollar
Several key currencies gained ground as the dollar index stayed below 99. The British pound traded near $1.3604, close to its strongest point in three months. The Swiss franc exchanged hands at around 0.7999 per dollar. The euro maintained above $1.16 after extending gains from the previous session. Market participants also monitored the yen, which recently approached the 160-per-dollar threshold.
Minutes from the Federal Reserve’s July 28 and 29 meeting revealed ongoing concern about persistent inflation. Policymakers left the federal funds target range unchanged at 3.5% to 3.75%, with nine officials supporting the hold and three favoring a quarter-point hike. The Fed noted that economic activity continued expanding at a steady rate, but also highlighted that inflation was still above its 2% goal.
Minutes reveal division over future rate hikes
The record from the meeting indicated that several policymakers were willing to back higher interest rates in July. Many members suggested that tighter policy might be needed if inflation failed to approach the 2% target. The central bank also continued its reserve management approach, rolling over principal payments from Treasury securities at auction. The upcoming Federal Reserve policy meeting is scheduled for September 15 and 16.
The recent decline of the dollar was driven by falling bond yields and market assessments of the updated U.S. policy landscape. The dollar index remains close to levels last seen in May, while the 30-year Treasury yield stayed below the 19-year high observed earlier this week. With the expanded Treasury buybacks set to begin in September and the interest rate range holding steady, these developments continue to influence trading across foreign exchange and U.S. bond markets on Thursday.