The US dollar index ended the session little changed after fluctuating between gains and losses. The Japanese yen was the weakest performer among G10 currencies, while the New Zealand dollar outperformed after the Reserve Bank of New Zealand raised interest rates and signaled further policy tightening.
The Bloomberg Dollar Spot Index was largely flat, having earlier risen as much as 0.2% after US President Donald Trump suggested the US could launch further strikes against Iran. Prior to that, the index had fallen 0.1%.
Stocks and bonds both declined after Trump stated that a ceasefire agreement with Iran may have already ended.
"The market reaction has been relatively contained but in line with expectations," said Win Thin, chief economist at Bank of Nassau 1982.
Minutes from the Federal Reserve's June monetary policy meeting revealed that a few officials saw a case for raising rates, though they ultimately supported the decision to hold steady.
The euro gained 0.1% against the dollar to 1.1427.
European Central Bank Governing Council member Joachim Nagel expressed concern over developments in the Middle East and reiterated that the ECB may still need to raise interest rates again.
The New Zealand dollar advanced 0.5% against the greenback to 0.5706.
In a report, Goldman Sachs strategists including Stuart Jenkins, Lexi Kanter, and Teresa Alves wrote, "We see the RBNZ embarking on a fresh hiking cycle—albeit a potentially short one—which should be positive for the New Zealand dollar."
The US dollar fell 0.2% against the Canadian dollar to 1.4168. The Canadian dollar is one of the worst-performing G10 currencies so far this year.
"The USMCA is neither dead nor on life support," wrote Macquarie Group strategists Thierry Wizman and Gareth Barry. "There is a lot of uncertainty about whether and when the agreement will be renewed."
"US President Trump may be incentivized to get a renewal deal done before the mid-term elections in November. Still, the Canadian dollar does not like this uncertainty," they added.
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