US Dollar Weakens as Canadian Dollar Rises After Bessent Comments on Trade

The U.S. dollar index fell 0.1% to 1187.48 on Tuesday, while the Canadian dollar strengthened after U.S. Treasury Secretary Scott Bessent commented on the outlook for U.S.-Canada trade relations. According to Sina Finance, the dollar index hit its lowest level since May and came close to its lowest since February. USD/CAD fell 0.2% to 1.3783, and the Canadian dollar’s gains narrowed even after Bessent said, when asked about U.S.-Canada trade tensions, "I think we will get through this." USD/JPY was little changed at 154.34 after earlier nearing its strongest level this year. The Japanese yen was supported by a near 30-year jump in nominal wages, driven by strong corporate profits and a tight labor market, while Japan’s second-quarter growth rate was revised higher than previously estimated. Market participants widely expect the Bank of Japan to raise rates next week. AUD/USD rose 0.1% to 0.7223 after Reserve Bank of Australia official Andrew Hauser said the bank was prepared to raise rates again if necessary and warned that upside inflation risks remain a concern. NZD/USD fell 0.4% to 0.5858 after Reserve Bank of New Zealand Monetary Policy Committee external member Prasanna Gai said the official cash rate may already be within the neutral range. EUR/USD was little changed at 1.1626 as the European Union and Canada work toward a comprehensive new relationship covering areas from trade to security. GBP/USD held steady at 1.3541, while a global bond selloff pushed yields higher and drove British government bond issuance financing costs to their highest level since at least 1998, further squeezing the government's fiscal room ahead of next month's budget.