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USD/CAD edges lower as oil rises and the dollar softens
WTI is near $86.0, supporting the Canadian dollar, while traders look ahead to the July 28 to 29 FOMC meeting as the July rate hike odds rise to 28%
USD/CAD moved lower on Wednesday, driven by a mildly softer US dollar alongside rising oil prices that helped the Canadian dollar snap a two day losing streak. The pair was around 1.4085, down 0.16% on the day.
Higher oil prices typically support Canada’s commodity linked currency, and West Texas Intermediate traded near $86.00, its highest level since June 11. Oil has been rising amid disruptions to shipping through the Strait of Hormuz, plus fresh supply concerns in the Red Sea as threats tied to Yemen’s Ansar Allah increase.
The greenback remained supported by geopolitical tensions and expectations for a hawkish Federal Reserve, with oil gains adding to inflation risk. The US dollar index was around 101.12, down 0.08% on the day, while traders awaited the July 28 to 29 FOMC meeting, where CME FedWatch now places the July rate hike probability at 28% and the September hike odds at 69%.
On the Canadian side, the Bank of Canada kept its policy rate unchanged at 2.25% at its July meeting and said it was prepared to adjust rates if needed, according to FXStreet.
Latest closeDollar index 101.12 ▼0.1%