Rising crude prices support the CAD amid Middle East tensions, offsetting USD strength driven by geopolitical risk aversion.
USD/CAD traded around 1.3950 in Asian hours Wednesday, paring earlier gains as higher oil prices bolstered the commodity-linked Canadian Dollar. Canada’s role as the largest crude exporter to the US amplifies the CAD’s sensitivity to oil market movements.
Crude prices rebounded after a brief dip Tuesday, fueled by renewed supply concerns as Middle East conflicts escalated. Israel and Iran briefly paused hostilities before tensions flared again, with the US launching retaliatory strikes on Iranian targets Wednesday.
The USD remained firm amid risk aversion, limiting losses for the pair. Uncertainty over a potential Middle East peace deal continues to weigh on market sentiment, with few signs of progress since a tenuous ceasefire in early April.