Geopolitical tensions and weaker US jobs data drive risk aversion, boosting the USD against the CAD near 1.3950.
The USD/CAD pair climbed to around 1.3950 in early European trading Monday, recovering from over 0.5% losses the prior session. Rising safe-haven demand for the US Dollar (USD) fueled the move amid escalating Middle East tensions, including military engagements near the Strait of Hormuz and attacks on Saudi refineries and tankers.
US labor market data added to the cautious sentiment, with July Nonfarm Payrolls dropping by 23,000 and June figures revised sharply lower to 20,000 from 57,000. Markets now price a 44% chance of a 25-basis-point Fed rate hike in September, down from 67% a week earlier.
Investors are shifting focus to upcoming US inflation reports, which could further influence Fed policy expectations. Iran’s rejection of direct US talks and ongoing regional conflicts continue to weigh on risk appetite.