[MARKET ANALYSIS] DXY ekes slight gains in rangebound trade, while NZD underperforms after the RBNZ kept rates unchanged and refrained from any hawkish surprises

DXY: +0.1%

• Ekes slight gains following the recent mixed performance against its major counterparts and after bets over Fed rate cuts by year-end were slightly trimmed. There were also several comments from Fed officials, including Fed Governor Barr, who signalled no urgency to resume easing and believes the outlook suggests the central bank will hold rates steady for some time, while Barr and Goolsbee both said they want to see more evidence on inflation ebbing to the 2% target before entertaining further easing. Furthermore, Fed's Daly said that current policy is slightly restrictive and that they have 75bps to get to neutral, while participants now look ahead to the FOMC Minutes due later today.

EUR/USD: -0.1%

• Lacks firm conviction after the prior day's whipsawing in which the single currency was initially pressured in the aftermath of disappointing EU and German ZEW data, but then clawed back most of its intraday losses after finding support near the 1.1800 level.

GBP/USD: -0.1%

• Remains constrained following yesterday's underperformance, owing to a soft labour market report, which showed the unemployment rate unexpectedly rose to 5.2% from 5.1%, and wage growth slowed across both key measures, while attention now turns to incoming UK CPI data.

USD/JPY: +0.2%

• Edged higher as the positive risk appetite in Japan spurred outflows from Japan's haven currency, but with losses in the yen cushioned by the stronger-than-expected trade data.

Antipodeans: AUD/USD -0.2% / NZD/USD -0.6%

• Antipodeans weakened with NZD underperforming following the RBNZ meeting, where the central bank kept the OCR at 2.25%, as expected, which was the first time it paused in four meetings and the first rate decision under Governor Breman's term. RBNZ refrained from any hawkish surprises and noted that the committee will continue to assess incoming data carefully and if the economy evolves as expected, monetary policy is likely to remain accommodative for some time.

The DXY's slight gains indicate a market response to mixed updates on Fed policy, reflecting a consensus that rates will remain steady in the near term. The RBNZ's decision to pause rate hikes without hawkish signals has led to an underperformance of the NZD, suggesting traders are wary of prolonged accommodative policies which could weigh on the currency in the future.