Geopolitical escalation in the Middle East drives demand for the safe-haven USD, pressuring the CAD ahead of key inflation data.
The USD/CAD pair climbed to near 1.4165, ending a four-day decline as the US Dollar strengthened against the Canadian Dollar. The move follows US military strikes in Iran and retaliatory attacks by Tehran-backed forces, heightening regional tensions.
Canada’s labor market showed resilience in June, adding 18.2K jobs, surpassing the 10K consensus forecast. The unemployment rate dipped to 6.5%, reinforcing expectations that the Bank of Canada will hold rates steady at 2.25% in July.
Investors are now focused on Tuesday’s US CPI report, which could influence Fed policy expectations and further impact the USD/CAD pair.