A 12% surge in oil prices this week boosts the CAD, pressuring USD/CAD to near 1.4022 amid geopolitical tensions in the Strait of Hormuz.
USD/CAD dropped to around 1.4022, its lowest level in a month, as the Canadian Dollar strengthened on a nearly 12% rise in oil prices this week. Escalating US-Iran tensions disrupted energy shipments through the Strait of Hormuz, driving crude higher and supporting the Loonie, a key oil exporter.
The Bank of Canada held its policy rate at 2.25% earlier this week but raised its 2026 inflation forecast to 2.5% from 2.3%, citing persistent energy price pressures. The BoC also removed its two-way policy guidance, signaling a more balanced approach amid inflation risks. Meanwhile, softer US inflation data initially weakened the USD, though concerns over reaccelerating inflation limited the Greenback’s losses.
The pair is on track for a second straight weekly decline, reflecting broader CAD strength as oil prices remain elevated.