Safe-haven demand and hawkish Fed projections lift the USD while lower oil prices and geopolitical risks weigh on the CAD.
USD/CAD rose to 1.4191, its highest level in 14 months, as the USD strengthened on safe-haven flows amid escalating US-Iran tensions. The pair extended gains for a fifth straight session during Asian trading on Monday, supported by renewed geopolitical risks and a hawkish Federal Reserve stance.
Canada’s Consumer Price Index data, due later in the North American session, may influence the Bank of Canada’s policy outlook. The Fed’s latest projections showed nine of 19 policymakers anticipate at least one rate hike this year, with markets pricing in a potential September increase. Meanwhile, lower oil prices pressured the commodity-linked CAD, as Canada remains the largest crude exporter to the US.
Traders are monitoring developments after US President Donald Trump threatened direct strikes on Iran if Hezbollah attacks persist, derailing diplomatic progress. Iran’s closure of the Strait of Hormuz and suspension of negotiations added to market uncertainty, reinforcing demand for the USD.