WASHINGTON, D.C. / RankWire.AI / – On Thursday, the U.S. dollar hovered near a three-month low, driven by a drop in long-term Treasury yields. The dollar index was around 98.81 against a basket of six major currencies. The euro rose to approximately $1.1676, marking its strongest level since late May. The Japanese yen strengthened to nearly 158.45 per dollar, while sterling stayed close to a three-month high. Currency markets responded to falling bond yields and new details from the Federal Reserve and U.S. Treasury Department.
The U.S. Treasury Department announced an expansion of liquidity-support buybacks for longer-dated government debt, with maximum purchase amounts doubling from $2 billion to $4 billion for qualifying operations. This increase applies to nominal coupon securities with maturities between 10 and 20 years, as well as those between 20 and 30 years. The larger-scale buybacks will commence on September 9 and continue through November 4, with officials also planning to release an updated tentative schedule for these operations.
The 30-year U.S. Treasury yield traded near 5.18% on Thursday after a decline during the previous session. Earlier in the week, yields reached 5.337%, the highest since 2007. This retreat in yields coincided with renewed weakness in the dollar across major currency pairs. Treasury yields serve as a key indicator for global financial markets and dollar-denominated securities. During the current quarterly refunding period, the Treasury’s expanded buyback program will be implemented.
Weakening dollar boosts major currencies
The euro remained above $1.16 after extending its recent gains against the dollar. Sterling was near $1.3604 and stayed close to its strongest point in about three months. The Swiss franc was around 0.7999 per dollar. The Japanese yen gained after approaching the 160-per-dollar level recently. Meanwhile, the dollar index stayed below 99, near its weakest reading since May. Currency markets continued to reflect recent movements in U.S. yields and monetary policy data.
Minutes from the Federal Reserve’s July 28 and 29 meeting indicated inflation remained a primary concern. Policymakers kept the federal funds target range unchanged at 3.5% to 3.75%, with nine officials supporting the status quo and three favoring a quarter percentage point increase. The Fed also reported that U.S. economic activity persisted in growing at a solid pace. Inflation stayed above the central bank’s 2% objective during the period covered by the meeting.
Inflation concerns emphasized in Fed minutes
Several Federal Reserve policymakers indicated readiness to support a rate hike at the July meeting, citing the possibility that higher rates could be needed if inflation failed to approach the 2% target. The central bank maintained its stance of keeping ample reserves in the banking system and continued rolling 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 recent dollar performance coincided with markets evaluating lower long-term yields and updated U.S. policy signals. The dollar index stayed close to a three-month low during Thursday’s trading session. The 30-year Treasury yield remained below the 19-year high reached earlier in the week. The scheduled start of expanded Treasury buybacks in September, as announced, is part of ongoing market developments, with the Federal Reserve maintaining its benchmark rate range. These factors continue to influence currency trading and U.S. government debt movements.