USD/CAD extends its advance for a second consecutive day and trades around 1.4230 at the time of writing on Monday, up 0.20% on the day.
Despite higher Oil prices, which would normally support the commodity-linked Canadian Dollar (CAD), the Loonie remains under pressure against the US Dollar (USD) as investors continue to favor the Greenback
Shipping traffic through the Strait of Hormuz is gradually returning to normal after disruptions over the weekend, while the Organization of the Petroleum Exporting Countries and its allies (OPEC+) approved a 188K-barrel-per-day production increase for next month, led by Saudi Arabia and Russia. The decision is viewed as a sign of confidence in regional stability, although it has also revived concerns about a potential global supply surplus. The US Dollar continues to strengthen as markets expect further monetary tightening from the Federal Reserve (Fed).
According to the CME FedWatch tool, investors are pricing in a 76.9% chance of additional interest rate hikes by the end of the year. Market participants are now awaiting the release of the Fed’s June meeting minutes on Wednesday for further guidance on the outlook for monetary policy. Meanwhile, the US ISM Services Purchasing Managers Index (PMI) eased slightly to 54 in June from 54.5 previously, matching market expectations.