Currency Hedger No Comments

Canadian Dollar softens on strong US PPI data, US-Iran peace deal uncertainty

  • USD/CAD edges higher to around 1.3980 in Friday’s early Asian session. 
  • The annual US PPI inflation rate was the highest since November 2022. 
  • BoC left the interest rates unchanged at its June meeting on Wednesday. 

The USD/CAD pair gains traction to near 1.3980 during the early European trading hours on Friday, bolstered by hot US inflation data. Traders will closely monitor the developments surrounding the US-Iran peace deal. The preliminary reading of the Michigan Consumer Sentiment Index for June is due later on Friday. 

Data on Thursday showed US Producer Price Index (PPI) inflation rose more than expected in May, leading to the largest annual gain in three and a half years as the Middle East conflict drove up the cost of energy products.

The Fed is clearly missing its inflation target by a lot more than it is missing its employment objective,” said John Ryding, chief economic advisor at Brean Capital. “The PPI report should further embolden those on the FOMC who think a rate hike might be needed later in the year,” Ryding added. 

US President Donald Trump said on Thursday that the US and Iran could sign a peace deal as soon as this weekend that would reopen the Strait of Hormuz to shipping. Iran countered that it had not reached a final decision on an agreement. However, uncertainty remains high amid ongoing tensions in the Middle East. 

US forces intercepted and shot down two Iranian one-way attack drones near the Strait of Hormuz on Thursday after Iran attempted to target commercial vessels transiting the waterway, per Fox News. The Islamic Revolutionary Guard Corps (IRGC) said that the country is stronger than ever and ready to deliver a “decisive, immediate, painful and regret-inducing response” to any aggression.

On the Loonie front, the Bank of Canada (BoC) on Wednesday decided to hold its key interest rate unchanged as expected and said it was ‌seeing limited evidence that higher energy prices were fueling broad-based inflation.

Nonetheless, BoC Governor Tiff Macklem reiterated that the bank would not hesitate to raise rates if need be to keep inflation in check. “The Governing Council is continuing to look through the war’s near-term impact on headline inflation but will not let higher energy prices become persistent inflation,” according to the BoC statement. 

Currency Hedger No Comments

Canadian Dollar advances as Middle East uncertainty weighs on US Dollar

  • USD/CAD falls as the US Dollar pauses ahead of Middle East updates and crucial Fed policy data.
  • A hot US inflation report solidified expectations for a “higher-for-longer” Federal Reserve interest rate environment.
  • The Canadian Dollar may weaken as falling oil prices follow reports of the US completing military strikes in Iran.

USD/CAD loses ground for the third successive day, trading around 1.3940 during the Asian hours on Thursday. The pair depreciates as the US Dollar (USD) holds losses as investors assess ongoing Middle East tensions with anticipation of upcoming US economic data, which could signal the Federal Reserve’s next policy moves.

The Greenback may regain its ground amid rising safe-haven demand due to the ongoing Middle East conflict. Israeli military says that the Home Front Command, the branch of the Israel Defense Forces (IDF) responsible for civil defense, issued an early warning after launches from Lebanon toward northern Israel.

The US Dollar (USD) gained ground after a hot inflation report released on Wednesday, which effectively solidified expectations for a “higher-for-longer” interest rate environment from the Federal Reserve. Driven primarily by war-induced energy price spikes, US inflation accelerated in May to its fastest pace in over three years. %. Traders await the upcoming release of the May Producer Price Index (PPI) and Initial Jobless Claims later today.

The US Consumer Price Index (CPI) rose 4.2% year-over-year and 0.5% monthly, both perfectly matching market forecasts. Meanwhile, core CPI, which strips out volatile food and energy costs, climbed 0.2% on the month and 2.9% annually. Following the data release, financial markets aggressively pivoted, abandoning any remaining expectations for Fed rate cuts this year.

The downside of the USD/CAD pair could be restrained as the commodity-linked Canadian Dollar (CAD) may face challenges amid lower oil prices, given Canada’s status as the largest crude exporter to the United States (US).

West Texas Intermediate (WTI) oil holds losses near $89.50 per barrel at the time of writing. Crude oil prices eased after the US military announced it had completed its latest strikes on Iran, raising hopes that peace negotiations could resume and tempering oil supply concerns.

Earlier, the US launched fresh attacks on Iran after President Trump accused Tehran of delaying talks on an interim peace agreement, while Iran reportedly responded by targeting US vessels in the Strait of Hormuz.

Currency Hedger No Comments

Canadian Dollar drops to two-month low vs USD as Fed-BoC gap counter higher Oil prices

  • USD/CAD retains a bullish bias and continues to draw support from a combination of factors.
  • Domestic growth concerns and the divergent BoC-Fed expectations undermine the Loonie.
  • Geopolitical risks benefit the safe-haven USD and further offer some support to spot prices.

The USD/CAD pair climbs to a nearly two-week high during the Asian session on Thursday, with bulls now looking to build on the positive momentum further beyond the 1.3900 mark.

The Canadian Dollar (CAD) continues with its relative underperformance against the US Dollar amid slowing domestic growth, a softening labor market, and interest rate divergence between the Bank of Canada (BoC) and the US Federal Reserve (Fed). In fact, Canada faced consecutive quarters of economic contraction during the January-March 2026 period, confirming a technical recession. Adding to this, rising unemployment and weakening consumer demand could force the BoC to adopt a more dovish stance.

In contrast, traders are currently assigning over a 50% chance that the Fed will raise interest rates in 2026 amid sticky inflation. This, along with persistent geopolitical uncertainties, acts as a tailwind for the safe-haven USD and continues to offer some support to the USD/CAD pair. In the latest development surrounding the Middle East conflict, the US military said on Tuesday that it had intercepted and defeated a series of Iranian missile and drone attacks targeting regional neighbors – Kuwait and Bahrain.

Furthermore, the lack of a breakthrough in US-Iran diplomatic negotiations, amid a standoff over Tehran’s nuclear program and the Strait of Hormuz, keeps geopolitical risks in play. This, in turn, assists Crude Oil prices in preserving weekly gains registered over the past three days, which helps limit further losses for the commodity-linked Loonie. Adding to this, the Israel-Lebanon agreement on the implementation of a ‌ceasefire keeps a lid on the safe-haven USD and contributes to capping the upside for the USD/CAD pair.

Investors also seem hesitant and opt to wait for the release of monthly employment details from the US and Canada on Friday. The crucial US Nonfarm Payrolls (NFP) report will be looked for more cues about the Fed’s policy path, which, along with the incoming geopolitical headlines, will drive the USD demand. Moreover, Crude Oil price dynamics should provide a fresh impetus to the USD/CAD pair. Nevertheless, the fundamental backdrop suggests that the path of least resistance for spot prices is to the upside.

Currency Hedger No Comments

Canadian Dollar weakens despite higher oil prices

  • USD/CAD gains as market risk aversion leaves the Canadian Dollar flat, failing to capitalize on rising crude oil prices.
  • WTI rises as Middle East supply fears grew after Iran fired unsuccessful ballistic missiles at Kuwait and Bahrain.
  • US Dollar strengthens as the Strait of Hormuz closure raises energy prices and inflation, keeping Fed rates higher for longer.

USD/CAD edges higher after posting minor losses in the previous day, trading around 1.3850 during the Asian hours on Wednesday. The commodity-linked Canadian Dollar (CAD) fails to capitalize on rising crude oil prices as intensifying market risk aversion prompts trader caution, keeping the currency flat.

West Texas Intermediate (WTI) climbed for a third consecutive session, trading near $92.60 per barrel at the time of writing. This price surge follows a fresh escalation of hostilities in the Middle East, where Iran launched ballistic missiles toward neighboring Kuwait and Bahrain. According to ABC News, US Central Command (CENTCOM) successfully intercepted the missile and drone attacks while executing self-defense strikes on Iran’s Qeshm Island.

The threat of a prolonged closure of the Strait of Hormuz has stoked fears of a broader energy supply disruption, which could drive global inflationary pressures higher. This backdrop strongly reinforces expectations that the Federal Reserve (Fed) will maintain elevated interest rates for an extended period, supporting the US Dollar (USD). This higher-for-longer monetary outlook is heavily supported by a resilient US economy, highlighted by the May 2026 ISM Manufacturing PMI jumping to 54.0 from 52.7, beating forecasts to mark the strongest factory expansion since May 2022.

Further evidence of economic strength appeared in the labor market, where April JOLTS data showed job openings surging to a nearly two-year high of 7.61 million alongside declining layoffs. With robust manufacturing and employment data complicating the inflation outlook, investors are now anxiously awaiting Friday’s Nonfarm Payrolls report for definitive clues on the future trajectory of Fed policy.

Currency Hedger No Comments

CAD weakens as firmer USD counter recovering Oil prices

  • USD/CAD gains positive traction for the second straight day amid a pickup in the USD demand.
  • Geopolitical uncertainty and hawkish Fed bets continue to act as a tailwind for the Greenback.
  • Rebounding Oil prices offset dismal Canadian GDP, underpinning the Loonie and capping gains.

The USD/CAD pair attracts some buyers for the second consecutive day and reclaims the 1.3800 mark during the Asian session on Monday. Spot prices, however, lack bullish conviction and remain below the highest level since April 13, near the 1.3870 region, touched last week amid a combination of diverging forces.

The uncertainty over US-Iran talks to end a three-month-old conflict and Israel’s incursion into Lebanon keeps geopolitical risk in play, underpinning the safe-haven US Dollar (USD) and acting as a tailwind for the USD/CAD pair. In fact, differences over Iran’s nuclear program and the Strait of Hormuz continue to complicate efforts to reach a deal. Moreover, Iran’s chief negotiator, Mohammad Bagher Qalibaf, stated that the country will not accept any agreement until its national rights are fully secured.

Adding to this, reports suggest that the US has hardened its negotiating position with Iran. This, along with bets that the US Federal Reserve (Fed) will hike interest rates by the end of this year, assists the USD to build on Friday’s modest bounce from a two-week low. The Canadian Dollar (CAD), on the other hand, is undermined by dismal domestic GDP figures, which showed that the economy contracted at 0.1% annualized pace in the first quarter of 2026, and further supports the USD/CAD pair.

Meanwhile, the latest development surrounding the Middle East crisis triggers a goodish recovery in Crude Oil prices, from over a one-month low touched on Friday. This, in turn, helps limit the downside for the commodity-linked Loonie and might keep a lid on any further appreciating move for the USD/CAD pair. Hence, it will be prudent to wait for strong follow-through buying before positioning for the resumption of the recent well-established uptrend witnessed over the past month or so.

Currency Hedger No Comments

Sharp drop of the CAD; Canadian GDP data spooked investors

The Canadian economy contracted by 0.1% in Q1 2026 , while the market had expected growth of as much as +1.5%. On a month-over-month basis, March saw a decline of 0.1% m/m (est. 0.0%), and annual GDP growth was a mere 0.4% y/y compared to the expected 0.9%. The data confirms that the Canadian economy is increasingly feeling the effects of the trade war with the US—exports are slowing sharply, and consumption is not making up for the losses. This opens the door to further rate cuts by the Bank of Canada, which had already signaled caution. CAD under heavy pressure — USDCAD has skyrocketed.

Source: xStation

Currency Hedger No Comments

USD/CAD Price Trades below 1.3800 with bullish bias on weak Oil, USD uptick

  • USD/CAD stalls the previous day’s sharp retracement slide from its highest level since April 13.
  • Weaker Oil prices undermine the Loonie and support spot prices amid a modest USD uptick.
  • The technical setup favors bulls, warranting some caution before positioning for further losses.

The USD/CAD pair attracts some dip-buyers during the Asian session on Friday, stalling the previous day’s sharp retracement slide from the 1.3870 region, or the highest level since April 13. Spot prices, however, lack follow-through and remain below the 1.3800 mark, warranting caution before positioning for the resumption of the monthly uptrend amid mixed signals over a potential US-Iran peace deal.

Axios, citing two US officials, reported that the US and Iran have reached a draft agreement to extend the ongoing ceasefire for 60 days. The optimism, in turn, keeps Crude Oil prices depressed close to an over a one-month low touched on Thursday, which is seen undermining the commodity-linked Loonie and acting as a tailwind for the USD/CAD pair. Meanwhile, the US and Iran remain at odds over key issues, including Tehran’s nuclear program and the Strait of Hormuz. This keeps the enthusiasm under check, which, along with bets that the US Federal Reserve (Fed) will hike rates by the end of this year, helps revive the US Dollar (USD) demand and further supports spot prices.

From a technical perspective, the overnight downfall dragged the USD/CAD pair below the 23.6% Fibonacci retracement level of the recent upswing from the monthly low. However, momentum indicators are holding a constructive bullish bias and back the topside tilt. Furthermore, the Relative Strength Index (RSI) is hovering near 57, and Moving Average Convergence Divergence (MACD) is in positive territory, hinting that buyers still retain control while spot prices stay above the 38.2% Fibo. support near mid-1.3700s. If a deeper pullback unfolds, spot prices could find decent support around 1.3720-1.3700 confluence – comprising the 50% Fibo. and the 100-day Simple Moving Average (SMA).

On the topside, momentum back above the 23.6% retracement at 1.3797 would open the door toward the overnight swing high, near 1.3872. This is followed by the 1.3900 round figure and the 1.3930-1.3940 supply zone, which, if cleared decisively, should pave the way for an extension of the month-to-date uptrend.

(The technical analysis of this story was written with the help of an AI tool.)

USD/CAD daily chart

Chart Analysis USD/CAD

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Euro.

USDEURGBPJPYCADAUDNZDCHF
USD0.11%0.06%0.05%0.03%0.02%-0.40%0.03%
EUR-0.11%-0.05%-0.04%-0.07%-0.07%-0.47%-0.08%
GBP-0.06%0.05%0.00%-0.04%-0.03%-0.43%-0.02%
JPY-0.05%0.04%0.00%-0.01%-0.03%-0.46%-0.03%
CAD-0.03%0.07%0.04%0.00%-0.02%-0.42%-0.00%
AUD-0.02%0.07%0.03%0.03%0.02%-0.40%0.01%
NZD0.40%0.47%0.43%0.46%0.42%0.40%0.42%
CHF-0.03%0.08%0.02%0.03%0.00%-0.01%-0.42%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Currency Hedger No Comments

Canadian Dollar: Rebalancing offers near-term relief – BNY

Geoff Yu at BNY highlights that Canadian Dollar (CAD) dynamics differ from the U.S., with equity-based rebalancing pointing toward CAD support as growth and allocation trends move opposite to the US Dollar. Fixed income steepening and poor CAD performance are seen amplifying CAD buying signals, suggesting some relief for the Canadian Dollar into month-end.

Canadian Dollar supported by flows

“Mathematically, our figures suggest that the unwinding of USD/CAD hedges – the discontinuation of forward USD selling against CAD on U.S. positions – played a big role in the dollar’s performance and some reversion is needed.”

“The only other equity-based rebalancing signal is in the CAD, where growth and asset allocation trends are pointing in the opposite direction.”

“In contrast, CAD buying is being amplified by similar steepening in bond markets on top of poor currency performance.”

“USD and CAD have again generated the same net selling and buying signals, though the dollar’s signal is far weaker, as poor bond performance offset dollar purchases. In contrast, CAD buying is being amplified by similar steepening in bond markets on top of poor currency performance.”