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Canadian dollar strengthens as oil jumps on Strait of Hormuz risk

USD/CAD was around 1.4144 after a fifth straight day of losses, while WTI rose more than 4% as traders weighed Middle East supply disruption concerns.

Reported · Written up by our desk · Major Pairs

The Canadian dollar outperformed many of its major peers as renewed Middle East tensions pushed crude higher on fresh risks around tanker traffic in the Strait of Hormuz, according to FXStreet. At the time of writing, USD/CAD traded near 1.4144 and remained under pressure for a fifth consecutive day.

FXStreet said WTI was around $74.50, up more than 4% on the day, supporting the currency because Canada is a major oil exporter. The outlet noted that the US and Iran exchanged missile and drone attacks over the weekend, with Tehran claiming the strait was closed to tanker traffic.

The US, however, said the waterway remains open, and the currency market is reacting to the evolving situation. FXStreet also said the US Dollar Index was around 101.14 after dipping below 101.00 earlier.

The article added that higher oil prices could revive inflation concerns, increasing pressure on central banks. FXStreet pointed to the Bank of Canada policy decision on Wednesday, widely expected to keep its rate unchanged at 2.25%, and noted markets are watching US CPI and Fed Chair Kevin Warsh’s testimony, with CME FedWatch indicating a 71% probability of a September rate hike.

Latest closeWTI crude $78.04 ▲9.3%|Dollar index 101.28 ▲0.3%

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