The Canadian dollar strengthens for a fourth straight week, supported by steady oil prices and a softer USD ahead of key data.
The USD/CAD pair trades near a three-month low, just above 1.3750, extending losses for a third consecutive day. The decline marks the fourth weekly drop in five, driven by a weaker US dollar and elevated crude oil prices, which bolster the commodity-linked Canadian dollar.
Crude oil holds near a three-week high as geopolitical tensions, including US-Iran standoffs and Houthi attacks on oil tankers, sustain risk premiums. Meanwhile, US inflation data showing easing price pressures has reduced expectations for a Federal Reserve rate hike in September, weighing on the USD Index (DXY).
The DXY remains near its lowest level since mid-May, further pressuring the USD/CAD pair. Traders now price in a higher probability of the Fed holding rates steady at its upcoming meeting, reinforcing the dollar’s weakness.