Forex News: Dollar Gains As Minutes Reveal Split FOMC Outlook

Dollar Gains As Minutes Reveal Split FOMC Outlook

(RTTNews) - The U.S. Dollar gained against major currencies during the week ended January 2 as the minutes of the latest Federal Open Markets Committee revealed a Fed split over the interest rate strategy for 2026. The dollar's strength came amidst thin holiday trading.

The minutes released on Tuesday showed that some participants in the FOMC felt it appropriate for the Committee to ease its policy stance in response to downside risks to employment. On the other hand, several participants pointed to the risk of higher inflation becoming entrenched and suggested that lowering the policy rate further in the context of elevated inflation readings could be misinterpreted as implying diminished policymaker commitment to the 2 percent inflation objective. Amidst the divergence in the rate outlook and the uncertainty triggered by the same, the greenback rallied during the week ended January 2.

The greenback inter alia rallied against the euro, the British pound, the Australian Dollar, the Japanese yen, the Swedish krona, the Canadian dollar as well as the Swiss franc. The Dollar Index which measures the Dollar's strength against a basket of 6 currencies rallied close to half a percent during the past week.

The Dollar Index, a measure of the Dollar's strength against a basket of 6 currencies gained 0.41 percent during the week ended January 2. The index closed at 98.42, versus 98.02 a week earlier. Though the Index had dropped to a low of 97.92 on Monday, it touched a high of 98.50 on Wednesday.

Amidst the dollar's rebound, the EUR/USD pair ended the week on a negative note, closing 0.44 percent lower at 1.1720 versus 1.1772 a week earlier. During the week, the pair ranged between the high of 1.1789 recorded on Monday and the low of 1.1713 touched on Friday.

The GBP/USD pair also slipped 0.30 percent during the week ended January 2. The sterling declined to $1.3460, from $1.3500 a week earlier after touching a high of $1.3532 on Tuesday and a low of $1.3401 on Wednesday.

The Australian Dollar also declined 0.33 percent against the U.S. Dollar during the week ended January 2. The pair ranged between the high of 0.6729 recorded on Monday and the low of 0.6659 recorded on Wednesday but eventually closed at 0.6694. The pair was at 0.6716 a week earlier.

The yen weakened and the USD/JPY pair rallied 0.17 percent during the past week ended January 2. The pair rose to 156.84, from 156.57 a week earlier. The week's trading ranged between the low of 155.75 recorded on Tuesday and the high of 157.01 recorded on Friday.

The dollar has rallied further at the onset of the new year amidst the developments over the weekend related to Venezuela. Anxiety ahead of key economic data releases due during the week including the monthly jobs data, also lifted the dollar. The 6-currency index is currently at 98.68 versus 98.42 at close on Friday.

The EUR/USD pair has slipped to 1.1679 from 1.1720 on Friday. The GBP/USD pair is currently at 1.3466 versus 1.3460 at the end of the previous week. The AUD/USD pair has declined to 0.6689 from 0.6694 on Friday.

Amidst hints from Bank of Japan's leadership about further interest rate hikes, the yen has strengthened, dragging the USD/JPY pair to 156.78. The pair had closed at 156.84 on Friday.

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