USD slips as Asia FX intervention risks return to focus – OCBC

FXStreet Insights Team FXStreet

The USD edged lower without clear catalysts. Asia FX intervention returned to focus after verbal warnings from Japan’s Finance Minister Katayama and top MOF diplomat Mimura, while US Treasury Secretary Bessent flagged KRW weakness as inconsistent with Korea’s strong fundamentals, OCBC's FX analysts Sim Moh Siong and Christopher Wong note.

Risk-off tone nudges dollar lower amid mixed Fed signals

"Despite resilient US consumer data, US equities fell on rotation out of tech. Lower Treasury yields and a rally in precious metals was consistent with the risk-off sentiment. The Beige Book offered early optimism for 2026, with most Fed districts reporting the first pickup in activity in a year and expecting further improvement ahead."

"Meanwhile, the Supreme Court again delayed a ruling on the IEEPA tariff case, leaving markets guessing. Fedspeak remains split: Minneapolis Fed’s Kashkari stayed hawkish, seeing 'no impetus to cut in January', while Philly Fed’s Paulson leaned dovish, calling modest cuts 'likely appropriate' later this year."

"We expect limited USD weakness in 1H26 amid institutional and Fed independence concerns. However, cyclical strength in US data from AI-driven investment and fiscal easing under the OBBB Act could support a greenback rebound in 2H26."

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FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

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The market trades the path not the past

The payroll number did not just beat. It reset the tone. 130,000 vs. 65,000 expected, with a 35,000 whisper. 79 of 80 economists leaning the wrong way. Unemployment and underemployment are edging lower. For all the statistical fog around birth-death adjustments and seasonal quirks, the core message was unmistakable. The labour market is not cracking.

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