WASHINGTON, D.C. / RankWire.AI / – The U.S. dollar remained near a three-month low on Thursday as long-term Treasury yields declined. The dollar index traded around 98.81 against a basket of six major currencies. The euro rose to about $1.1676, its strongest level since late May. The Japanese yen strengthened to nearly 158.45 per dollar. Sterling also held close to a three-month high. Currency markets tracked lower bond yields alongside fresh details from the Federal Reserve and U.S. Treasury Department.
The U.S. Treasury Department announced an increase in liquidity-support buybacks for longer-dated government debt. Maximum purchases will double from $2 billion to $4 billion for eligible operations. The increase covers nominal coupon securities in the 10-year to 20-year maturity range. It also covers securities with maturities between 20 and 30 years. The larger transactions will start on September 9 and run through November 4. Treasury officials also plan to publish an updated tentative schedule for the operations.
The 30-year U.S. Treasury yield traded near 5.18% on Thursday after falling during the previous session. Earlier in the week, the yield reached 5.337%, its highest level since 2007. The retreat in yields accompanied renewed weakness in the dollar across major currency pairs. Treasury yields remain a key measure for global financial markets and dollar-denominated securities. The U.S. Treasury Department’s expanded buyback program will apply during the current quarterly refunding period.
Dollar weakness supports major currencies
The euro held above $1.16 after extending its recent advance against the U.S. currency. Sterling traded near $1.3604 and remained close to its strongest level in about three months. The Swiss franc stood around 0.7999 per dollar. The yen also gained after recently approaching the 160-per-dollar level. Meanwhile, the dollar index stayed below 99 and near its weakest reading since May. Foreign exchange markets continued to reflect the latest movement in U.S. yields and monetary policy data.
Minutes from the Federal Reserve’s July 28 and 29 meeting showed that inflation remained a central concern. Policymakers kept the federal funds target range unchanged at 3.5% to 3.75%. Nine officials supported maintaining the existing range. Three preferred an increase of a quarter percentage point. The Federal Reserve also reported that U.S. economic activity continued to expand at a solid pace. Inflation remained above the central bank’s 2% objective during the period covered by the meeting.
Fed minutes highlight inflation concerns
Several Federal Reserve policymakers indicated they were prepared to support a rate increase at the July meeting. Many participants said higher rates could become necessary if inflation failed to move toward the 2% goal. The central bank maintained its approach to keeping ample reserves in the banking system. It also continued rolling over principal payments from Treasury securities at auction. The Federal Reserve will hold its next scheduled monetary policy meeting on September 15 and 16.
The dollar’s latest performance came as markets assessed lower long-term yields and updated U.S. policy signals. The dollar index remained close to a three-month low during Thursday trading. The 30-year Treasury yield also stayed below the 19-year high reached earlier this week. Expanded Treasury buybacks will begin in September under the announced schedule. The Federal Reserve, meanwhile, continues to hold its benchmark rate range steady. These developments remained central to trading in currencies and U.S. government debt.