USD/CAD trades around 1.3940 on Monday at the time of writing, virtually unchanged on the day, after falling sharply on Friday.
The US Dollar (USD) benefits from cautious safe-haven demand as geopolitical tensions in the Middle East remain elevated, while rebounding Oil prices provide support for the Canadian Dollar (CAD)
Concerns surrounding the conflict between the United States (US) and Iran continue to weigh on risk appetite, with particular attention focused on the Strait of Hormuz. Tehran indicates that talks with Oman aimed at establishing a safe shipping route through the strategic waterway are nearing an agreement, while stressing that any potential deal would not lead to an immediate reopening. Geopolitical risks also remain elevated after Iran-backed Houthi militants in Yemen claimed a recent attack on Saudi Arabia’s Jazan refinery.
A tanker operated by Abu Dhabi National Oil Company was also targeted in the Strait of Hormuz. The persistent uncertainty encourages caution across financial markets and helps support the US Dollar. On the economic front, the Nonfarm Payrolls (NFP) report released on Friday shows that the US economy lost 23K jobs in July, reinforcing concerns about a slowdown in the US labor market.