Forex
Home›Forex›Major Pairs›USD/CAD near 1.4060 as oil rises on escalating US-Iran…
USD/CAD near 1.4060 as oil rises on escalating US-Iran tensions
FXStreet notes traders are positioning ahead of Canada Retail Sales, while expectations for a more hawkish Fed remain in focus.
USD/CAD traded near 1.4060 in early European hours on Thursday, with the pair drawing selling pressure as crude oil prices climbed, according to FXStreet. The move is supporting the Canadian dollar, which is closely linked to oil given Canada’s role as a major oil exporter.
FXStreet linked the oil strength to escalating Middle East tensions, including attacks on Saudi oil tankers in the Red Sea and a US warning that it would target Iranian infrastructure if vessel attacks in the Strait of Hormuz continue. Traders are also bracing for Canada’s Retail Sales release later on Thursday.
The outlook for US monetary policy is another driver, with market participants weighing the probability of a July Fed hike. FXStreet cited Deutsche Bank strategist Jim Reid saying the odds of a July hike had risen back to 26% by Tuesday’s close, after moving lower following the US CPI print.
Looking ahead, FXStreet said participants will watch the US S&P Global Flash Purchasing Managers Index report due Friday for clues on the strength of US manufacturing and services. TD Securities expects trade uncertainty related to new US section 338 measures to keep USD/CAD above 1.40 near term, while allowing scope for a move toward its 1.39 year-end forecast if conditions stabilize.
Latest closeWTI crude $87.52 ▲3.1%