WASHINGTON, D.C. / RankWire.AI / – On Thursday, the U.S. dollar remained close to a three-month minimum as yields on long-term Treasuries eased. The dollar index hovered around 98.81 against a basket of six major currencies. The euro increased to approximately $1.1676, reaching its highest point since late May. Meanwhile, the yen appreciated to roughly 158.45 per dollar. Investors also digested new measures in the Treasury market and details from the Federal Reserve’s latest policy meeting.
The Treasury Department announced increased liquidity-support buybacks for longer-dated U.S. government securities. The maximum purchase size will rise from $2 billion to $4 billion for qualifying operations. This adjustment applies to nominal coupon securities in the 10-year to 20-year and 20-year to 30-year segments. These expanded buyback activities will commence on September 9 and will continue through November 4, marking the conclusion of the current quarterly refunding cycle.
This announcement was accompanied by a notable decline in long-term government bond yields. The 30-year Treasury yield stood near 5.18% on Thursday, having fallen from a previous session. Earlier this week, it peaked at 5.337%, the highest since 2007. Falling Treasury yields can diminish the relative returns on dollar-denominated debt. The Treasury Department is expected to release an updated tentative schedule for the larger buyback program soon.
Major currencies strengthen against the dollar
A number of key currencies gained value as the dollar stayed below the 99 mark on its index. The pound traded near $1.3604, approaching its strongest level in three months. The Swiss franc exchanged hands at about 0.7999 per dollar. The euro maintained levels above $1.16 after extending gains from the previous session. Currency traders also monitored the yen after it recently approached the 160-per-dollar threshold, which has attracted market attention.
Minutes from the Federal Reserve’s July 28 and 29 meetings revealed ongoing concerns about high inflation. The federal funds target range was maintained at 3.5% to 3.75%. Nine officials supported holding rates steady, while three favored a quarter-point increase. The Fed noted that economic activity continued expanding at a solid pace, but also acknowledged that inflation remained above its 2% goal.
Federal Reserve meeting highlights inflation and interest rate outlook
The minutes indicated that multiple policymakers were willing to support higher interest rates in July. Several participants expressed that tighter monetary policy might be necessary if inflation did not move toward the 2% target. The central bank continued its approach to reserve management by rolling over principal payments from Treasury securities at auction. The upcoming Federal Reserve policy meeting is scheduled for September 15 and 16.
The recent weakening of the dollar was driven by falling bond yields and market assessments of the updated U.S. policy environment. The dollar index stayed near levels last seen in May, while the 30-year Treasury yield remained below its 19-year high from earlier this week. The phased-in Treasury buybacks beginning in September and the unchanged interest-rate target range continued to influence trading in foreign exchange and U.S. government bond markets on Thursday.