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USD/CAD near one-month low as oil jumps and USD recovery fades

The pair is set for a second straight weekly decline as oil prices rise nearly 12% this week on Strait of Hormuz disruption.

Reported · Written up by our desk · Major Pairs

USD/CAD was under pressure on Friday, holding around 1.4022 and close to a one-month low, as the Canadian dollar gained support from firmer oil prices while the US dollar’s recovery stalled, FXStreet reports.

The move comes as oil prices are up nearly 12% for the week, with intensifying fighting between the United States and Iran disrupting energy shipments through the Strait of Hormuz. Because Canada is a major crude oil exporter, higher crude prices tend to support the loonie.

Higher energy costs are also reviving inflation concerns and complicating the central bank outlook. Earlier, the Bank of Canada kept its policy rate unchanged at 2.25%, raised its 2026 inflation projection to 2.5% from 2.3%, and expects inflation to return to the 2% target by early 2027, while removing two-way policy guidance introduced in April.

On the US side, softer-than-expected inflation data earlier this week initially weighed on the dollar as traders trimmed bets on a near-term Federal Reserve rate hike. FXStreet says that pullback proved short-lived as oil-driven inflation fears helped reinforce expectations for a Fed hike later this year, with the US Dollar Index around 100.83 after a more than three-week low of 100.35 on Wednesday.

Latest closeWTI crude $79.00 ▼0.8%|Dollar index 100.71 ▲0.2%

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