WASHINGTON, D.C. / RankWire.AI / – The U.S. dollar hovered close to a three-month minimum on Thursday as yields on long-term Treasury securities declined. The dollar index was around 98.81 against a basket of six major currencies, while the euro appreciated to approximately $1.1676, marking its strongest point since late May. Meanwhile, the yen strengthened to roughly 158.45 per dollar. Investors also processed new Treasury market initiatives along with details from the Federal Reserve’s latest policy meeting.
The Treasury Department revealed plans for increased liquidity-support repurchase operations involving longer-dated U.S. government securities. The maximum purchase limit will increase from $2 billion to $4 billion for eligible operations, applying to nominal coupon securities in the 10-year to 20-year and 20-year to 30-year segments. These expanded operations are set to commence on September 9 and will extend through November 4, coinciding with the conclusion of the current quarterly refunding period.
This announcement coincided with a notable decline in yields on long-term government bonds, with the 30-year Treasury yield near 5.18% on Thursday after a dip during the prior session. Earlier in the week, it reached 5.337%, the highest since 2007. A decrease in Treasury yields can diminish the relative return on dollar-denominated debt instruments. The Treasury Department intends to release an updated tentative schedule for the expanded buyback operations.
Key currencies appreciate versus the dollar
Several major currencies gained strength as the dollar index stayed below 99. The pound sterling traded near $1.3604, close to its highest in three months. The Swiss franc was around 0.7999 per dollar, and the euro maintained levels above $1.16 following gains from the previous session. Currency traders also monitored the yen after it recently approached the 160-per-dollar mark, a level closely watched by market participants.
Minutes from the Federal Reserve’s July 28-29 meeting revealed ongoing concerns over persistent inflation. The committee kept the federal funds target range steady at 3.5% to 3.75%, with nine officials supporting the decision to hold rates unchanged and three advocating for a quarter-point hike. The Fed indicated that economic activity remained robust, and officials acknowledged that inflation still exceeded the central bank’s 2% goal.
Federal Reserve meeting minutes show rate hike considerations
The minutes disclosed that several policymakers were inclined to support higher interest rates in July, emphasizing that tightening monetary policy might become necessary if inflation did not trend toward the 2% target. The central bank continued its approach to reserve management, rolling over principal payments from Treasury securities at auction. The upcoming Federal Reserve policy meeting is scheduled for September 15 and 16.
The recent drop in the dollar was driven by declining bond yields and market reassessment of the new U.S. policy landscape. The dollar index hovered near levels last observed in May, and the 30-year Treasury yield remained below the 19-year high hit earlier this week. The expanded Treasury buyback program will start in September, although the benchmark interest rate range has not changed. These developments continue to influence trading in foreign exchange and U.S. government bond markets on Thursday.