USD/CAD trades around 1.4040 on Wednesday at the time of writing, down 0.14% on the day, as the Canadian Dollar (CAD) benefits from a rebound in Oil prices.
Crude prices received support after Yemen’s Houthis claimed responsibility for an attack on a Saudi vessel in the Red Sea, temporarily raising concerns over global energy supplies
However, the upside in Oil prices remains limited by hopes of a diplomatic breakthrough in the Middle East. According to Axios, the United States (US), Iran and Oman are close to reaching an interim agreement to reopen the Strait of Hormuz. The proposed framework would establish a 60-day temporary arrangement across the strategic waterway, which handles nearly 20% of the world’s energy supply.
US Treasury Secretary Scott Bessent also said that a deal could be announced as early as Wednesday, boosting optimism for a gradual normalization of the situation. On the US side, the US Dollar (USD) remains pressured by another round of softer economic data. The Automatic Data Processing (ADP) Employment Change report showed that private payrolls increased by 44K in July, well below the market expectation of 70K.