Canadian Dollar holds steady as oil values decline

USD/CAD Holds Steady Amid Oil Price Volatility

The USD/CAD currency pair remained stable near 1.3640 during Friday’s Asian trading session, following a gain of over 0.25% in the previous day. The Canadian Dollar, which is closely tied to commodity prices, could see renewed strength as oil prices surge—Canada being the primary crude oil supplier to the United States.

Oil Prices Surge on Geopolitical Tensions

West Texas Intermediate (WTI) crude saw a slight pullback after soaring more than 9% in the last session, with prices hovering around $95.00 per barrel at the time of reporting. The upward trend in oil may persist, driven by the effective shutdown of the Strait of Hormuz amid intensifying conflict involving the US, Israel, and Iran.

Since the onset of the conflict, US crude oil has jumped by over 40%. The International Energy Agency (IEA) has cautioned that the ongoing US-Israeli military actions against Iran are causing what could be the most significant supply disruption ever witnessed in the global oil market.

Iran’s Response and Regional Risks

Mojtaba Khamenei, Iran’s newly appointed supreme leader, addressed the public for the first time since taking office, emphasizing that keeping the Strait of Hormuz closed serves as leverage against adversaries. He further warned that all American military installations in the region must be evacuated immediately or risk potential attacks.

USD/CAD Outlook and Upcoming US Economic Data

Downward movement in the USD/CAD pair may be limited, as the US Dollar is expected to remain resilient. Futures markets and analysts widely anticipate that the Federal Reserve will leave interest rates unchanged at next week’s policy meeting, with the current federal funds rate set between 3.50% and 3.75%.

Investors are also looking ahead to the release of January’s Personal Consumption Expenditures Price Index (PCE), the Fed’s preferred measure of inflation, which is scheduled for later today. However, this report will not account for the recent developments in Iran. Additionally, markets are watching for the initial revision of fourth-quarter US GDP figures and the latest consumer confidence data for March.