Currency markets have slipped into a mid-week lull by the look of things this morning. The US Dollar (USD) is little changed in broad terms and the core majors are narrowly mixed, with minor losses for the CAD and EUR against minor gains for the AUD, GBP, NZD (despite a 'dovish hold' decision by the RBNZ) and SEK, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret note.

USD idles US yields slip off yesterday's peaks
"The MXN is the top-performing major currency with an intraday gain of less than 0.1%. Stocks are in a positive mood (amid signs that EU/US trade talk are progressing), however, and while European bonds are firmer, Treasurys are underperforming. Wide-ranging comments from President Trump yesterday beefed up tariff threats and took another pop at Fed Chair Powell. Copper tariffs might be 50%, pharma 200% (but only next year), and there would be no further pauses in tariffs after August, despite suggesting Tuesday that the August 1 date was 'firm, but not 100% firm'."

"This may be posturing but if the copper and pharma tariffs threats are anywhere near realistic, the Fed (well, this Fed), will have a hard time considering rate cuts. Copper is a significant component of home construction costs and sourcing alternative, domestic supply will be nigh on impossible in the short run. Copper prices jumped yesterday and are holding some 10% above Tuesday's low. While intraday FX moves are very limited, trends such as they are do reflect FX correlations with copper (firmer but not statistically significant, positive correlations with the likes of the AUD, GBP and CLP)."

"DXY's steady rebound since the start of the month, aided and abetted by the rebound in US term yields, is consolidating today. On the charts, the upward trend remains intact but may be slowing in the mid/upper 97 zone. Broader USD sentiment does appear to have turned somewhat less bearish over the past few sessions but we think the USD has its work cut out to rebound significantly. Mild, corrective gains could extend a little more but the longer run trend remains bearish. Intraday support is 97.3."

Source: Fxstreet