The US Dollar (USD) is trading mixed versus is major currency peers but gains versus the core majors overnight appear to have peaked, leaving the Dollar Index (DXY) trading down modestly on the session, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD trades mixed, DXY drops back from overnight peak

"The NZD is trading more than 1% lower following the RBNZ policy decision—a 25bps cut, as expected, but with dovish guidance—while Asian FX has been pulled somewhat lower by the drop in tech stocks. The core majors are little changed but the JPY is outperforming mildly. Activity appears to have picked up slightly but volatility remains very low and markets are lacking conviction ahead of Friday’s Jackson Hole event."

"The DXY remains range-bound in broader terms and we think a combination of 1) expected Fed policy easing in the months ahead, 2) weaker US growth momentum and 3) unsustainable fiscal policy all combine still to suggest limited upside potential in the dollar in the short run and the risk of more, potentially significant, losses ahead. It’s another very lean day for data in North America."

"There is a USD16bn auction of 20Y Treasurys, the Fed releases the minutes for the July FOMC, one of the two dissenters at that meeting (Waller) speaks at a Blockchain event while Bostic (non-voter) discusses the economic outlook later this afternoon."