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USD/CAD slides as oil jumps and Fed hike odds cool

USD/CAD was around 1.3800, with TD Securities pointing to supported Brent risk premia amid Strait of Hormuz supply concerns.

Reported · Written up by our desk · Major Pairs

USD/CAD extended losses for a second straight day, trading around 1.3800 during Thursday’s Asian session, as a firmer crude backdrop supported the commodity-linked Canadian dollar. FXStreet said the move came alongside improved oil prices tied to escalating Middle East tensions, with negotiations between the United States and Iran described as stalled.

FXStreet reported that crude prices rose as the confrontation broadened to the Strait of Hormuz, even as Donald Trump said oil shipments were still moving and left room for future talks with Tehran. TD Securities characterized the geopolitical backdrop as a key driver for crude, warning that the Iran conflict is at risk of further escalation.

The article also linked the pair’s weakness to a softer US dollar, citing recent economic data and Federal Reserve policy expectations. According to FXStreet, minutes from the Fed’s July meeting showed officials leaning toward raising rates soon if inflation does not cool, while showing that cooling monthly inflation readings have reduced expectations for aggressive tightening.

FXStreet added that the CME FedWatch Tool put the probability of a rate hike at the next meeting at 32.7%, down from 47% a month earlier. It noted that Canadian-dollar drivers include Bank of Canada interest rates, oil prices, Canada’s export-heavy economy, inflation, trade balance, and broader risk sentiment.

Latest closeWTI crude $82.40 ▲1.4%

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