WASHINGTON, D.C. / RankWire.AI / – The U.S. dollar stayed near a three-month low on Thursday as long-term Treasury yields eased. The dollar index traded around 98.81 against a basket of six major currencies. The euro climbed to about $1.1676, its strongest level since late May. The yen strengthened to roughly 158.45 per dollar. Investors also absorbed new Treasury market measures and details from the Federal Reserve’s latest policy meeting.
The Treasury Department announced larger liquidity-support buybacks for longer-dated U.S. government securities. Maximum purchase sizes will rise from $2 billion to $4 billion for eligible operations. The change applies to nominal coupon securities in the 10-year to 20-year and 20-year to 30-year sectors. The expanded operations will start on September 9. They will continue through November 4, which marks the end of the current quarterly refunding period.
The announcement coincided with a sharp retreat in long-term government bond yields. The 30-year Treasury yield stood near 5.18% on Thursday after falling during the previous session. Earlier in the week, it reached 5.337%, the highest level since 2007. Lower Treasury yields can reduce the relative return available on dollar-denominated debt. The Treasury Department plans to publish an updated tentative schedule covering the larger buyback operations.
Major currencies gain against dollar
Several major currencies advanced as the dollar remained below the 99 level on its index. Sterling traded near $1.3604, close to its strongest level in three months. The Swiss franc changed hands at about 0.7999 per dollar. The euro held above $1.16 after extending gains from the prior session. Currency markets also tracked the yen after it recently moved close to the 160-per-dollar threshold watched by market participants.
Minutes from the Federal Reserve’s July 28 and 29 meeting showed continued concern about elevated inflation. Policymakers kept the federal funds target range unchanged at 3.5% to 3.75%. Nine officials supported holding rates steady, while three preferred a quarter-point increase. The Federal Reserve said economic activity continued expanding at a solid pace. Officials also noted that inflation remained above the central bank’s stated 2% objective.
Fed record highlights rate debate
The meeting record showed that several policymakers were prepared to support higher interest rates in July. Many participants said tighter policy could become necessary if inflation failed to move toward the 2% target. The central bank also maintained its approach to reserves in the banking system. It continued rolling 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 latest decline came as bond yields retreated and markets assessed the updated U.S. policy backdrop. The dollar index remained close to levels last seen in May. The 30-year Treasury yield also stayed below the 19-year high reached earlier this week. Expanded Treasury buybacks will begin in September, while the benchmark interest-rate range remains unchanged. Those confirmed developments continued to shape trading across foreign exchange and U.S. government bond markets on Thursday.