WASHINGTON, D.C. / RankWire.AI / – On Thursday, the U.S. Treasury Department indicated plans to boost liquidity support through larger buybacks of longer-term government securities, contributing to the dollar’s decline. The dollar index hovered around 98.81 against six major currencies, remaining close to a three-month low. Meanwhile, the euro appreciated to approximately $1.1676, reaching its highest level since late May. The Japanese yen also strengthened, trading near 158.45 per dollar. Markets continued to absorb the implications of new U.S. Treasury measures along with the latest Federal Reserve meeting minutes.
The Treasury Department announced that it would expand the size of liquidity-support buybacks for longer-dated government bonds, with maximum purchase amounts increasing from $2 billion to $4 billion for eligible operations. This program targets nominal coupon securities with maturities between 10 and 20 years, as well as those between 20 and 30 years. The enhanced buyback activity will commence on September 9 and continue through November 4, marking the conclusion of the current quarterly refunding period.
Following this announcement, long-term Treasury yields declined, with the 30-year yield trading around 5.18% on Thursday after a sharp decline in the prior session. Earlier this week, it had risen to 5.337%, the highest since 2007. Treasury yields significantly influence global currency and bond markets as they impact returns on dollar-denominated assets. The U.S. Treasury Department also plans to publish a revised tentative schedule for the expanded buyback operations.
Major Currencies Gain as the Dollar Weakens
The weakening dollar supported gains in several major currencies during Asian trading hours. The pound traded around $1.3604, maintaining proximity to a three-month high. The Swiss franc appreciated to approximately 0.7999 per dollar. The euro held above $1.16, building on the gains seen in the previous session. The yen moved further away from the 160-per-dollar level it recently neared. Meanwhile, the dollar index stayed below 99, approaching its lowest point since May.
Minutes from the Federal Reserve’s July 28 and 29 meetings revealed that policymakers remain concerned about persistent inflation. The committee kept the federal funds target range at 3.5% to 3.75%. Of the nine policymakers, all supported keeping rates steady, while three favored a quarter-point hike. The Fed also noted that economic activity continues to grow at a solid rate, with inflation still above its 2% goal, keeping price pressures at the forefront of policy considerations.
Federal Reserve Minutes Highlight Policy Divisions Over Interest Rates
At the July gathering, several policymakers indicated their readiness to support a rate increase if inflation did not trend toward the 2% target. Many suggested that higher interest rates could become necessary. The central bank maintained its current approach to reserves within the financial system and continued rolling over principal payments from Treasury securities at auction. The Federal Reserve’s next policy meeting is scheduled for September 15 and 16.
The recent currency movements reflected declining long-term yields and fresh U.S. policy updates. The dollar index remains close to levels last seen about three months ago, and the 30-year Treasury yield stayed below the 19-year high reached earlier this week. The expanded government bond buybacks will commence in September, with the federal funds target range remaining steady. These developments continue to influence trading in foreign exchange and U.S. government debt markets on Thursday.