The Canadian dollar rebounds from a one-week low against the USD, driven by a softer greenback and higher crude oil prices.
The USD/CAD pair fell 25-30 pips from a one-week high, reaching a fresh daily low during early European trading. The pullback follows a three-day USD winning streak, as hopes for a diplomatic resolution to US-Iran tensions weigh on the dollar.
Spot prices had recovered from the 1.4000 level, the lowest since June 17, but lack strong bullish momentum. Crude oil prices remain elevated due to risks of supply disruptions in the Strait of Hormuz and a Houthi maritime blockade, supporting the commodity-linked Canadian dollar.
Expectations of a Fed rate hike by year-end amid energy-driven inflation concerns may limit further downside for the USD/CAD pair.