The greenback slipped on Tuesday, while the Canadian dollar strengthened following comments from US Treasury Secretary Scott Bessent regarding the future of US-Canada trade relations. The dollar index eased 0.1% to 1187.48, touching its lowest level since May and approaching lows not seen since February.

The USD/CAD pair fell 0.2% to 1.3783, with the loonie's gains narrowing slightly even as Treasury Secretary Bessent, when asked about US-Canada trade tensions, said, "I think we will get through this." Meanwhile, the dollar held nearly flat against the yen at 154.34, after previously approaching its strongest level of the year. Japan's nominal wages posted their largest gain in nearly three decades, supported by robust corporate profits and a tight labor market, which is expected to back the Bank of Japan's move toward further monetary policy tightening. Japan's second-quarter economic growth also came in faster than initially reported, strengthening the case for a rate hike by the Bank of Japan next week, which is widely anticipated by markets.

The Australian dollar edged up 0.1% to 0.7223. Reserve Bank of Australia official Andrew Hauser stated that the central bank is prepared to raise interest rates again if necessary, warning that upside risks to inflation remain a persistent concern. In contrast, the New Zealand dollar slipped 0.4% to 0.5858. Reserve Bank of New Zealand monetary policy committee external member Prasanna Gai noted that the official cash rate may already be within the neutral range.

The euro held steady at 1.1626. The European Union and Canada are working toward a comprehensive new relationship covering areas from trade to security, aiming to forge a new alliance in response to the shifting landscape of global power politics. Sterling was stable at 1.3541. Following a global bond selloff that drove yields sharply higher, UK gilt issuance financing costs hit their highest level since at least 1998, further squeezing the government's fiscal headroom ahead of next month's budget.