Asian currencies and the U.S. dollar moved within tight ranges on Tuesday, reflecting subdued market conditions as thin year-end trading volumes kept activity muted. Investors remained cautious ahead of the release of the Federal Reserve’s December meeting minutes, which are expected to offer insight into the central bank’s policy outlook heading into 2026.
Trading across regional foreign exchange markets stayed quiet, with many participants stepping back ahead of the New Year holidays. The U.S. Dollar Index was little changed against a basket of major currencies, while Dollar Index futures slipped around 0.1%.
Fed minutes in focus for 2026 rate outlook
Market attention was firmly on the upcoming Fed minutes, following the central bank’s decision to cut interest rates earlier this month. Investors are looking for clues on how policymakers view the path forward, particularly after recent signs of easing inflation pressures.
Traders expect the minutes to highlight differing opinions within the Fed over the pace and scope of further rate cuts. Expectations for additional easing in 2026 have been a key theme in currency markets in recent weeks, weighing on the dollar and at times lending support to emerging Asian currencies.
However, uncertainty surrounding the timing and scale of future cuts has kept investors cautious, limiting any strong directional moves.
Asian FX trades sideways
Asian currencies largely mirrored the broader lack of momentum, trading within narrow ranges. The Japanese yen was mostly unchanged against the dollar, while the Singapore dollar edged slightly lower.
The South Korean won strengthened modestly, while the Indian rupee slipped marginally. In China, both the onshore and offshore yuan posted small gains against the dollar.
Meanwhile, the Australian dollar outperformed regional peers, rising modestly against the U.S. dollar during Tuesday’s session.
Overall, foreign exchange markets remain in wait-and-see mode, with the Fed minutes expected to provide the next meaningful catalyst for currency direction.
