[MARKET ANALYSIS] DXY marginally softens after Trump paused 50% tariffs on Canada, while FOMC Minutes loom

DXY: -0.1%

• DXY marginally softens with the greenback giving up ground to the loonie after US President Trump announced a three-day pause of the 50% tariffs on Canada that were due to kick in on Wednesday, as Canada and the US have reached a deal, subject to finalisation of documents. Elsewhere, there were few fresh catalysts for the dollar with headlines mostly centred around geopolitics, while participants await today's FOMC Minutes release.

EUR/USD: +0.1%

• Ekes slight gains against the dollar, but remains confined within a tight range at the 1.1500 handle, after the recent choppy mood and after comments from ECB's Lane did little to shift the dial.

GBP/USD: Flat

• Lacks direction following recent disappointing jobs data from the UK, including a higher-than-expected Unemployment Rate, while participants now await the latest inflation metrics.

USD/JPY: -0.1%

• Slightly pulled back amid a softer dollar and following stronger-than-expected Machinery Orders data from Japan, although price action is only mild and remains in the 159.00 territory.

Antipodeans: AUD/USD -0.1% / NZD/USD Flat

• Languishes around this week's lows with little reaction seen to the firmer-than-expected PPI data from New Zealand and hawkish comments from RBA's Hauser, who noted that inflation is too high and that they will have to raise rates again if it doesn't come down.

Tariff headlines of this kind have tended to follow a familiar sequence in the dollar: an initial risk-driven move in the exposed pair, here USD/CAD, with the broader index reacting only modestly unless the measure actually takes effect. Pauses and deferrals subject to final documentation have historically been treated as negotiating postures rather than resolved outcomes, which is why the DXY move stays shallow and the loonie takes the bulk of the relief; the tell in past episodes has been whether the paperwork materialises or the deadline slips again. Into FOMC Minutes, the pattern is well established: ranges compress, and the release moves the front end and the dollar only where the text reveals something the statement and press conference did not, typically on the balance of opinion behind a dissent or on inflation persistence language. Sterling's drift after a soft labour print with inflation data pending is the standard sequencing, where the next CPI release matters more for rate pricing than the jobs report that preceded it. RBA commentary of the 'will hike again if needed' variety has historically supported the currency on the day but fades without follow-through from data, and the muted AUD response here fits that pattern. The follow-ons are the Minutes themselves, UK inflation figures, and any confirmation or slippage on the Canada documents.