Falling crude prices weigh on the Canadian Dollar after US-Iran deal hopes, pushing USD/CAD to 1.4068.
USD/CAD reversed earlier losses to trade at 1.4068, a fresh weekly high, as Oil prices slumped on optimism over US-Iran negotiations. The Canadian Dollar, closely tied to crude, came under pressure despite a slight weakening in the US Dollar.
West Texas Intermediate fell nearly 4% to $75.50, its lowest level since July 13. Lower Oil prices reduce energy-driven inflation, easing pressure on central banks to maintain restrictive monetary policy. The probability of a Fed rate hike in September dropped to 58.9% from 67.2% a day earlier.
The decline in Oil also alleviates inflation concerns for the Bank of Canada, though the Loonie remains vulnerable to further crude price movements.