Asia FX, dollar steady as year-end lull persists; Fed minutes in focus

Asian currencies and the U.S. dollar traded within narrow ranges on Tuesday, as subdued year-end trading conditions kept activity muted and investors awaited the release of the Federal Reserve’s meeting minutes later in the day for guidance on the policy outlook into 2026.

Foreign exchange markets across the region saw limited participation, with many traders remaining on the sidelines ahead of the New Year holiday. The U.S. Dollar Index was largely unchanged against a basket of major currencies, while Dollar Index futures slipped 0.1%.

Attention was firmly on the minutes from the Fed’s December policy meeting, which are expected to provide insight into discussions following the central bank’s recent interest rate cut. Investors are watching closely for signs of disagreement among policymakers over the pace and magnitude of further easing, particularly as inflation shows signs of cooling.

Expectations of additional rate cuts in 2026 have been a key theme in currency markets in recent weeks. Traders have increasingly priced in the possibility of multiple cuts next year, a shift that has pressured the dollar at times and offered intermittent support to Asian emerging-market currencies. However, lingering uncertainty over the timing and extent of easing has kept sentiment cautious and limited directional moves.

Regional currencies reflected the lack of conviction, trading mostly in tight ranges. The Japanese yen was little changed, while the Singapore dollar edged 0.1% higher against the greenback. The South Korean won strengthened by 0.2%, and the Indian rupee rose 0.2%.

In China, the onshore yuan gained 0.2% against the dollar, while the offshore yuan also posted modest gains.