A recovering USD offsets gains in oil and strong Canadian jobs data, capping the Loonie’s rally near 1.3925.
The USD/CAD pair recovers from Friday’s near two-month low of 1.3925, climbing above mid-1.3900s in early Asian trade. A rebound in the USD, driven by geopolitical tensions and Fed rate hike bets, counters support for the Canadian Dollar from higher oil prices and upbeat domestic employment data.
Friday’s US Nonfarm Payrolls miss initially weighed on the USD, but escalating US-Iran tensions and inflation concerns tied to rising crude prices revived demand for the Greenback. Meanwhile, the Loonie remains underpinned by Canada’s stronger-than-expected jobs report and uncertainties over the Strait of Hormuz, which could sustain oil price gains.
Traders are cautious ahead of this week’s US inflation data, which may influence Fed policy expectations. The pair’s upside remains limited as market participants await further cues before positioning for a potential breakout.