Fed Cut Bets Override Hawkish Minutes, Boost AUD, NZD

Despite hawkish language in the latest FOMC minutes, markets spent the week of August 17-21 positioning for upcoming Fed rate cuts, driving broad dollar weakness. The disconnect between official commentary and trader positioning highlights growing confidence that policy easing is closer than the Fed itself is signaling.

NZD and AUD led the gains among major currencies, even as a cooling Australian job market complicated the RBA's own policy outlook. Meanwhile, accelerated Canadian inflation data gave the CAD an additional lift, adding another layer to a week defined by diverging domestic data against a weakening greenback backdrop.

This tug-of-war between hawkish central bank rhetoric and dovish market pricing sets up a volatile stretch for USD/CAD and AUD/USD as traders await confirmation from incoming US data.