WASHINGTON, D.C. / RankWire.AI / – On Thursday, the US dollar hovered close to a three-month minimum as yields on long-term Treasury bonds declined. The dollar index hovered around 98.81 against a basket of six key currencies. The euro appreciated to approximately $1.1676, reaching its strongest point since late May. The Japanese yen appreciated to nearly 158.45 per dollar, while Sterling also remained near a three-month high. Currency traders responded to the decline in bond yields, influenced by new details from the Federal Reserve and the U.S. Treasury Department.
The U.S. Treasury Department announced plans to boost liquidity support buybacks for longer-dated government debt. The maximum purchase amount will double from $2 billion to $4 billion for qualifying operations, covering nominal coupon securities with maturities between 10 and 20 years, and also those between 20 and 30 years. These increased transactions will commence on September 9 and continue through November 4, with officials planning to release a revised tentative schedule for these activities.
The yield on the 30-year U.S. Treasury bond traded near 5.18% on Thursday after a decline from the previous session. Earlier in the week, the yield had touched 5.337%, the highest since 2007. This pullback in yields coincided with renewed dollar weakness across major currency pairs. Treasury yields are a crucial indicator for global markets and dollar-denominated securities. The expanded buyback program from the U.S. Treasury will be active during this quarter’s refunding period.
Dollar downturn bolsters major global currencies
The euro remained above $1.16, extending its recent gains against the dollar. Sterling traded close to $1.3604, near its highest level in about three months. The Swiss franc was steady around 0.7999 per dollar. The Japanese yen gained further after approaching 160 per dollar recently. Meanwhile, the dollar index stayed below 99, near its lowest since May. Currency markets continued to reflect the latest shifts in U.S. yields and monetary policy updates.
Minutes from the Federal Reserve’s July 28 and 29 meeting revealed inflation remains a key concern. The committee maintained the federal funds target range at 3.5% to 3.75%, with nine officials supporting this decision and three favoring a quarter-point increase. The Fed also noted U.S. economic activity grew solidly, with inflation above the 2% goal during the meeting period.
Fed minutes underscore inflation worries
Several policymakers signaled willingness to raise rates at the July meeting, citing the need for higher rates if inflation did not trend toward 2%. The central bank continued its stance of maintaining ample reserves in the banking system and rolled over principal payments from Treasury securities at auction. The Federal Reserve’s next scheduled policy meeting will take place on September 15 and 16.
The dollar’s recent performance was influenced by falling long-term yields and new U.S. policy signals. It stayed near a three-month low during Thursday’s trading, with the 30-year Treasury yield remaining below the 19-year high reached earlier in the week. Treasury buybacks will ramp up in September according to the announced schedule. Meanwhile, the Federal Reserve continues to hold its benchmark rate steady. These factors remain central to currency and U.S. debt market movements.