Weaker oil prices weigh on the Canadian Dollar, lifting USD/CAD to 1.3760 amid softer inflation data and geopolitical tensions.
USD/CAD climbed to 1.3760 in Asian trading, extending gains for a second day as the Canadian Dollar weakened. The decline in oil prices, with WTI crude pausing its four-day rally near $102.80 per barrel, pressured the commodity-linked CAD. Canada’s reliance on oil exports to the US makes its currency sensitive to energy price fluctuations.
Canada’s annual inflation rate rose to 2.8% in April from 2.4% in March, missing forecasts of 3.1%. Monthly inflation slowed to 0.4% from 0.9%, while core measures cooled, aligning with the Bank of Canada’s view that energy-driven pressures may ease. Geopolitical risks, including US threats of military action against Iran, could support oil prices in the near term.
The market reaction remained muted, with traders balancing softer inflation data against broader USD strength and energy market volatility.