Early forex trade shows USD gaining slightly amid Middle East instability, while CAD strengthens on oil price surge.
The US dollar edged higher in early Monday trade as geopolitical tensions in the Middle East weighed on risk sentiment. Iran’s withdrawal from ceasefire negotiations and threats from former President Trump contributed to the cautious tone, lifting safe-haven demand for the USD. Most currencies softened, though the Canadian dollar bucked the trend, rallying as an oil proxy after reports of a Hormuz route closure sent crude prices spiking to $150 per barrel.
Traders are closely monitoring the situation, with expectations that flows could shift significantly if tensions escalate further. The weekend’s developments follow a period of relative stability in forex markets, though volatility remains elevated amid broader macroeconomic uncertainties. Oil-linked currencies like the CAD are particularly sensitive to supply disruptions in key shipping lanes.
Market reaction was muted in early trade, with liquidity thin ahead of the full session. Analysts suggest further moves will depend on updates from the Middle East and any shifts in risk appetite.