WASHINGTON, D.C. / RankWire.AI / – On Thursday, the U.S. dollar maintained its position close to a three-month low amid easing long-term Treasury yields. The dollar index hovered around 98.81 against a basket of six key currencies. The euro appreciated to approximately $1.1676, marking its strongest level since late May, while the yen gained to roughly 158.45 per dollar. Investors also digested new Treasury market measures and details from the Federal Reserve’s latest policy meeting.
The Treasury Department announced increased liquidity-support buybacks for longer-term U.S. government bonds, raising maximum purchase sizes from $2 billion to $4 billion for eligible operations. This update applies to nominal coupon securities in the 10-year to 20-year and 20-year to 30-year categories. These expanded operations will commence on September 9 and run through November 4, concluding the current quarterly refunding cycle.
This announcement coincided with a significant decline in long-term government bond yields. The 30-year Treasury yield hovered near 5.18% on Thursday after a recent dip, having previously hit 5.337% earlier in the week — the highest since 2007. Falling Treasury yields can diminish the relative return on dollar-denominated debt. The Treasury Department is also set to release an updated tentative schedule for the larger buyback operations.
Major Currencies Strengthen Versus the Dollar
Many leading currencies gained traction as the dollar index stayed below 99. The British pound traded near $1.3604, approaching its three-month peak. The Swiss franc traded around 0.7999 per dollar, while the euro maintained gains above $1.16, extending its rally from the previous session. The yen also drew attention after approaching the 160-per-dollar level, closely watched by traders.
Minutes from the Federal Reserve’s July 28 and 29 meeting revealed ongoing concerns about persistent inflation. Policymakers maintained the federal funds target range at 3.5% to 3.75%, with nine supporting a hold and three favoring a quarter-point hike. The Fed indicated economic growth remained solid, but inflation stayed above its 2% goal.
Federal Reserve Meeting Highlights Rate Hike Possibilities
The minutes showed that several policymakers were open to supporting higher interest rates in July, emphasizing the need for tighter policy if inflation did not approach the 2% target. The central bank also maintained its approach to reserves, continuing to roll over principal payments from Treasury securities at auction. The next scheduled Federal Reserve policy meeting will be held on September 15 and 16.
The recent decline in the dollar stemmed from falling bond yields and market assessments of the new U.S. policy landscape. The dollar index remained near levels seen in May, while the 30-year Treasury yield stayed below the 19-year high reached earlier this week. The upcoming large-scale Treasury buybacks begin in September, and the key interest rate range remains unchanged, shaping the trading momentum in foreign exchange and U.S. government bonds on Thursday.