- The USD/CAD pair climbed back above 1.3800 on Monday after opening near 1.3770, supported by broad US Dollar strength.
- The Greenback is gaining across the board amid a cautious market sentiment, as investors await key Fed speeches for more guidance on interest rates.
🏦 Focus on Federal Reserve Speeches
- Five Fed officials are scheduled to speak today.
- Key attention is on Stephen Miran, a newly appointed Fed board member, who will speak at the Economic Club of New York.
- Miran is expected to:
- Defend his independence despite being appointed by former President Donald Trump.
- Justify his support for a 50 basis point rate cut last week—double the official 25 bp cut.
- Contrast with Fed Chair Jerome Powell, who speaks on Tuesday and may offer a different tone.
🇨🇦 Canadian Dollar Reaction
- On Friday, the Canadian Dollar (CAD) regained some ground after the release of Retail Sales data:
- July data showed a contraction, in line with expectations.
- Preliminary August data suggested a 1% rebound, reducing expectations for further Bank of Canada (BoC) rate cuts.
🧠Market Sentiment and Currency Behavior
🔍 What is “Risk-On” vs. “Risk-Off”?
- Risk-On: Investors feel confident and seek higher returns from riskier assets (e.g., stocks, commodities, high-yield currencies).
- Risk-Off: Investors become cautious and shift to safe-haven assets (e.g., bonds, USD, JPY, CHF).
đź’ą What Assets Move with Risk Sentiment?
| Sentiment Type | Gaining Assets | Weakening Assets |
|---|---|---|
| Risk-On | Stocks, Commodities (except Gold), Crypto, AUD, CAD, NZD, ZAR | Safe-haven currencies (USD, JPY, CHF), Bonds |
| Risk-Off | Bonds (esp. US Treasuries), Gold, USD, JPY, CHF | Risk-sensitive assets like stocks, CAD, AUD, NZD |