Dollar Dynamics: Fed's Stance and Global Currency Shifts

The dollar rallied after the Federal Reserve minutes showed reluctance to cut interest rates, with U.S. yields rising. The currency's gains were notable against the euro and yen. The Aussie dollar approached employment data optimistically, while the New Zealand dollar fell dramatically after central bank hesitancy on rate hikes.

The U.S. dollar rebounced Thursday as the Federal Reserve's minutes revealed no rush for interest rate cuts, while some members were open to potential hikes should inflation remain high. This decision strengthened U.S. yields overnight, with gains solidifying against the euro and yen in Asian markets. The euro stayed below $1.18.

Anticipating employment data, the Aussie dollar traded at $0.7045, hinting at possible rate hike expectations. Meanwhile, New Zealand's dollar experienced a sharp decline, the steepest since last year's tariff impact, following a conservative stance on future rate hikes by its central bank, dropping nearly 1.4% overnight.

In currency markets, attention shifts to global PMI figures and U.S. GDP data. The yen weakened due to a stronger dollar and the U.S.'s $36 billion investment announcement under Japan's pledge. Meanwhile, holidays in Hong Kong, China, and Taiwan eased Asia's trading activity, with the yuan steady at 6.89 against the dollar offshore.

(With inputs from agencies.)