Forex roundup: dollar dips to new lows, CAD defies trade woes

The US dollar traded near three-month lows despite rising Treasury yields, while the Canadian dollar led gainers amid escalating trade tensions and the New Zealand dollar dipped on weak retail data.

Major currency dynamics

• The US dollar traded near three-month lows after a weekly decline, with analysts from BCA suggesting selling the greenback against other currencies. This comes even as US Treasury yields extended their rally after services PMI surpassed estimates. The dollar's outlook remains tied to the credibility of US Treasury and Fed policies.
• On an intraday basis, our strength gauge ranks the Canadian dollar as the strongest major today — a full turn from Tuesday, when the same gauge had it as the weakest. Last week closed with a different leader every session, and Friday's was the pound, so the rotation is still running. This strength comes even as US-Canada trade talks reportedly collapsed, leading to 50% tariffs coming into effect and Canada's Carney announcing retaliatory tariffs starting September 8th.
• The New Zealand dollar fell below 0.6000 after second-quarter retail sales data came in weaker than expected, dropping 0.5% against a forecast of 0.1%. InvestingLive noted the slowdown was much more pronounced than anticipated.
• The Australian dollar registered modest gains, trading above 0.7150, driven by concerns around US Treasury bond buybacks. FXStreet analysts see AUD/USD bulls targeting year-to-date highs following a recent breakout.
• The Japanese yen traded with a neutral bias, even as resilient US data emerged. CFTC reports indicate more bearish positioning for the yen. Headlines also questioned whether Bessent's intervention would mark a turning point for the yen, which is heading to stop its fall after intervention.
• The pound held around the mid-1.3600s, within striking distance of the highest level since February 11 that it touched on Friday, with bulls waiting on a break above 1.3660 — the payoff of a run that spent the previous week failing at three-month highs.
• The Swiss franc is the weakest currency on our intraday gauge, with USD/CHF bulls recovering the 0.8000 level as its recovery stalled.

Commodities and market sentiment

• Gold extended its run to around $4,625, its highest since May 15, as the Treasury's buyback plan kept the dollar under pressure. It cleared the $4,400 ceiling that had turned it back for five straight sessions last week, and closed the week up more than 5.6%.
• WTI crude oil slipped below $85.00 to around $84.80 after two days of gains, as traders took profits ahead of an expected US announcement on new sanctions against Iran. It traded at $86.50 on Friday, close to Thursday's $87.38 — its highest in more than three weeks.
• Market sentiment remains in Greed, with our FSI at 71. The MRS, a gauge of market readiness, eases to 59 from Friday's 66, while the CTS, our carry trade score, is high at 80. The week's real test comes later: the Jackson Hole symposium opens on Thursday and Fed Chair Warsh speaks on Friday.

Key events today

• USD · Treasury Sec Bessent Speaks · SCHEDULED at 18:00