US FX WRAP: Dollar gains amid risk-off sentiment as major risk events await

Sessions of this shape, a broad dollar bid driven by risk-off positioning into a major central bank decision, have a well-worn template: the greenback tends to outperform across the G10 when the move is sentiment-led rather than rate-led, with the high-beta and funding currencies absorbing the losses while the traditional havens hold up relatively better, as the franc did here. The notable wrinkle is that the dollar is rallying into a meeting where the market is pricing a near-certain hike, which in past episodes has set up asymmetric risk around the event itself: a delivered hike with hawkish guidance tends to extend the move only modestly, while any dovish surprise against such one-sided positioning has historically unwound it quickly. The Canadian inflation print illustrates the standard pattern where in-line headline readings with cooler monthly core components have tended to take the edge off domestic rate expectations and weigh on the currency at the margin. The PBoC offshore yuan expansion commentary fits the recurring pattern of gradual liberalisation signalling, which has historically mattered more for CNY liquidity conditions than for near-term G10 direction. What follows episodes of this kind is binary: the decision and guidance either validate the defensive positioning or trigger its unwind, with the press conference tone and any dissent usually the tell rather than the rate move itself.