CAD

• USD/CAD depreciates as rising crude prices provide support for the Canadian Dollar.
• Renewed Middle East tensions heighten oil supply risks despite an Iran-Oman shipping agreement through the Hormuz.
• Weak ADP payrolls and steady services growth shift investor focus to upcoming Nonfarm Payrolls.

USD/CAD loses ground for the second successive day, trading around 1.4010 during the European hours on Thursday. The pair remains under pressure as the commodity-linked Canadian Dollar (CAD) draws support from rebounding crude oil prices, a crucial factor given Canada’s position as a major oil exporter. Following three consecutive days of losses, West Texas Intermediate (WTI) crude recovered to trade near $74.90 per barrel. Prices were bolstered by renewed supply concerns following a deadly Israeli airstrike in southern Lebanon targeting Hezbollah infrastructure over reported ceasefire violations.

Meanwhile, market participants are weighing geopolitical developments against potential supply additions, particularly reports of a new maritime agreement between Iran and Oman. The two nations are finalizing a joint statement regarding a temporary two-to-four-month shipping route through the Strait of Hormuz. While Tehran clarified that this measure does not signal a full reopening of the strategic waterway, the prospect of increased Middle Eastern energy flows has somewhat tempered market fears of severe supply disruptions.

On the macroeconomic front, US economic data presented a mixed picture. ADP private-sector payrolls increased by just 44,000 in July, falling sharply from June’s revised figure of 95,000 and missing expectations of 70,000. On the other hand, the ISM Services PMI pointed to steady economic momentum, edging up to 54.1 from 54.0 in June, though it slightly lagged the forecasted 54.5. Investor focus now shifts to upcoming key catalysts, notably Thursday’s Initial Jobless Claims and Friday’s pivotal Nonfarm Payrolls (NFP) report.

US data mix points to mild downside risks for payrolls

ING’s FX team highlights a softer tone in the latest US data ahead of Friday’s payrolls. Analysts note that “ADP payrolls came in a bit soft at 44k and ISM services rose less than expected to 54.1 yesterday,” with particular concern around the labour market signal from the survey. They point out that “the services employment subindex plummeted to 47.5, which – according to our macro team – points to some mild downside risks for tomorrow’s payrolls,” reinforcing the case for a cautious market stance going into the release.

• USD/CAD attracts buyers for the fourth straight day, though it lacks follow-through amid mixed cues.
• Sliding oil prices undermine the Loonie, while receding geopolitical risks weigh on the safe-haven USD.
• Prospects for at least one Fed rate hike in 2026 favor USD bulls as traders look to the US macro data.

The USD/CAD pair trades with a positive bias for the fourth straight day and currently hovers around the 1.4070 region, or a nearly one-week high set the previous day. Spot prices, however, lack bullish conviction amid a combination of diverging forces, which warrants caution before positioning for an extension of the recent bounce from sub-1.4000 levels or the lowest since June 17.

Renewed hopes of a potential US-Iran deal to reopen the Strait of Hormuz drag crude oil prices to a nearly four-week low and undermine the commodity-linked Loonie, which, in turn, is seen supporting the USD/CAD pair. Meanwhile, weaker oil prices ease inflation fears and temper US Federal Reserve (Fed) rate hike expectations. Adding to this, receding geopolitical tensions weigh on the safe-haven US Dollar (USD) and cap the upside for the currency pair.

In the latest developments surrounding the Middle East crisis, Axios reported that the US, Iran, and Oman are closing in on an agreement to reopen the Strait of Hormuz. This comes on top of US Treasury Secretary Scott Bessent’s comments that the US could reach a deal with Iran to reopen the strategic waterway by Wednesday and move toward a more normalized position in this conflict. The remarks fueled optimism over a diplomatic resolution to end the US-Iran war.

Traders, however, are still pricing in a greater chance that the US central bank will raise borrowing costs by the end of this year amid signs that the US labor market is beginning to find its footing and looming inflation risks. Adding to this, Kansas City Fed President Jeff Schmid and Philadelphia Fed President Anna Paulson backed the case for higher interest rates to fight inflation. This should limit deeper USD losses and support prospects for further USD/CAD appreciation.

Traders now look to Wednesday’s US economic docket – featuring the release of the ADP report on private-sector employment and ISM Services PMI. Apart from this, the incoming geopolitical headlines and speeches from influential FOMC members would drive the USD demand. This, along with oil price dynamics, should provide some impetus to the USD/CAD pair. The focus, however, remains glued to the crucial monthly jobs report from the US and Canada, due on Friday.

• USD/CAD is seen consolidating the previous day’s recovery gains amid mixed cues.
• Recovering oil prices underpins the Loonie and acts as a headwind for spot prices.
• The US-Iran uncertainty benefits the safe-haven USD and lends support to the pair.

The USD/CAD pair struggles to capitalize on the previous day’s modest recovery gains and oscillates in a narrow band during the Asian session on Tuesday. Spot prices currently trade just below the 1.4050 level, nearly unchanged for the day, amid mixed fundamental cues.

The uncertainty over US-Iran talks helps crude oil prices gain some positive traction, which underpins the commodity-linked Loonie and acts as a headwind for the USD/CAD pair. The safe-haven US Dollar (USD), on the other hand, benefits from fading optimism over a potential US-Iran peace deal, lending some support to the currency pair. In the latest developments, Iran said on Monday there were no talks underway with the US and also no plans for any meetings.

This contradicted US President Donald Trump, who has cited resumption of negotiations as justification for calling off attacks over the weekend. Moreover, unconfirmed reports of drone strikes on US assets in Kuwait prompt traders to again price in the geopolitical risk premium. This, in turn, assists the safe-haven Greenback to preserve the previous day’s solid recovery gains from its June 17 low and holds back USD/CAD bears from placing fresh bets.

Meanwhile, the US-Iran standoff over the Strait of Hormuz, along with Houthi rebels’ naval blockade against Saudi Arabia, fuels concerns regarding global energy supplies and triggers a modest uptick in crude oil prices. This could revive inflation fears and keep bets for at least one interest rate hike by the US Federal Reserve (Fed) firmly on the table, which favors USD bulls and warrants caution before positioning for any meaningful decline for the USD/CAD pair.

Rabobank’s Benjamin Picton characterises the recurring pattern around the Strait of Hormuz as a kind of “Groundhog Day” for markets, warning that “later in the week strikes typically resume, oil prices rally, equities sell, and bond yields rise.” He adds that while “there is every chance of that happening this week,” for now the market is left with the impression of “‘strikes for strikes’,” as participants weigh the risk of renewed escalation against the current lull.

• USD/CAD attracts some buyers, albeit it lacks follow-through amid a combination of diverging forces.
• A slump in oil prices undermines the Loonie and supports spot prices, though a weaker USD caps gains.
• The focus shifts to this week’s key macro releases, including key jobs reports from the US and Canada.

The USD/CAD pair kicks off the new week on a positive note, though it lacks bullish conviction and remains confined within Friday’s broader range. Spot prices currently trade around the 1.4030 region, up less than 0.10% for the day amid mixed fundamental cues.

Crude oil prices tumble after US President Donald Trump cancelled a threatened attack on Iran, claiming Mideast allies have reached the parameters of a deal to end the five-month-old war. Adding to this, the OPEC+ members agreed to increase oil production by 188,000 barrels per day in September, exerting additional pressure on the black liquid. This, in turn, undermines the commodity-linked Loonie and acts as a tailwind for the USD/CAD pair, though the prevalent US Dollar (USD) selling bias caps further gains.

1An intraday slump in crude oil prices eases inflation fears and tempers bets for an immediate interest rate hike by the US Federal Reserve (Fed). Furthermore, aggressive follow-through short-covering around the Japanese Yen (JPY) drags the USD Index (DXY), which tracks the Greenback against a basket of currencies, to its lowest level since June 17. This, in turn, warrants some caution for USD/CAD bulls and positioning for any meaningful recovery from sub-1.4000 levels, or a one-and-a-half-month low touched last Thursday.

Market participants now look forward to this week’s important US macroeconomic releases, scheduled at the beginning of a new month, starting with the ISM Manufacturing PMI later today. The focus, however, will be on the crucial monthly employment reports from the US and Canada, due on Friday, which will play a key role in influencing the USD/CAD pair in the near term. Apart from this, further developments surrounding the Middle East crisis might continue to infuse volatility and provide some meaningful impetus.

• USD/CAD attracts some buyers amid a goodish USD recovery from the lowest level since June 17.
• Escalating US-Iran tensions keep inflation risks and Fed hike bets in play, supporting the Greenback.
• Supply concerns act as a tailwind for oil prices, underpinning the Loonie and capping spot prices.

The USD/CAD pair edges higher during the Asian session on Friday and, for now, seems to have snapped a three-day losing streak to the lowest level since June 17, touched the previous day. Spot prices currently trade above the 1.4000 psychological mark, though the intraday uptick lacks bullish conviction.

As investors look past Thursday’s unimpressive US macro data, the US Dollar (USD) regains some positive traction amid prospects for at least one interest rate hike by the US Federal Reserve (Fed) and offers some support to the USD/CAD pair. The Advance US GDP report showed moderating economic growth in the second quarter, while the US Personal Consumption Expenditures (PCE) Price Index pointed to signs of cooling inflation, tempering hawkish Fed expectations.

However, volatile crude oil prices suggest that inflation remains a concern, which could force the US central bank to adopt a more hawkish stance. Adding to this, escalating US-Iran tensions and the risk of a broader regional conflict in the Middle East act as a tailwind for the safe-haven USD. In the latest development, the US military announced it had completed a heavy wave of strikes against Iranian targets, in response to Tehran’s missile attacks on American forces earlier this week.

Meanwhile, Iran rejected Oman’s proposal, which would see Tehran partially control the Strait of Hormuz and collect voluntary fees for using the waterway. Furthermore, On the other hand, repeated attacks by Yemen’s Houthi militias in the Bab al-Mandab Strait, the Red Sea, and the Gulf of Aden add to concerns about disruptions to global energy supplies. This, in turn, could lend support to crude oil prices and underpin the commodity-linked Loonie, warranting some caution for USD/CAD bulls.

• USD./CAD struggles to gain any meaningful traction amid a combination of diverging forces.
• The USD recovers a part of the post-FOMC losses and acts as a tailwind for the currency pair.
• Supply worries support oil prices, underpinning the Loonie and capping gains for spot prices.

The USD/CAD pair is seen consolidating below mid-1.4000s during the Asian session on Thursday, though it remains close to an over one-week trough touched the previous day. However, a mixed fundamental backdrop warrants some caution before placing directional bets as the focus shifts to important US macro releases.

Thursday’s US economic docket features the Advance Q2 GDP report and the Personal Consumption Expenditures (PCE) Price Index. The data will be looked for more cues about the US Federal Reserve’s (Fed) policy path, which, in turn, will play a key role in influencing the US Dollar (USD) and provide some meaningful impetus to the USD/CAD pair. Apart from this, oil price dynamics should contribute to producing short-term trading opportunities.

In the meantime, the growing acceptance that the US central bank will hike interest rates by the end of this year amid inflation risks stemming from volatile oil prices supports the USD. Adding to this, escalating US-Iran tensions help the safe-haven buck to recover a part of the previous day’s post-FOMC decline to an over one-week low. This, in turn, is seen acting as a tailwind for the USD/CAD pair and warrants some caution for aggressive bearish traders.

The US central bank refrained from adopting a more hawkish stance at the end of a two-day policy meeting on Wednesday. That said, three members voted for a 25 basis points (bps) rate hike amid concern that inflation remains stubbornly above the Fed’s 2% target. Moreover, the CME Group’s FedWatch Tool indicates that traders have nearly priced in at least one interest rate hike by the end of this year, which favors USD bulls and supports the USD/CAD pair.

Meanwhile, US President Donald Trump said that he will order heavy strikes on Iran in retaliation for its “surprise attack” on US forces on Tuesday. Adding to this, the US-Iran standoff over the Strait of Hormuz and Yemen’s Iran-backed Houthi attacks in the Red Sea fuel concerns about significant disruptions to global energy supplies. This acts as a tailwind for crude oil prices, which could benefit the commodity-linked Loonie and cap the USD/CAD pair.

• USD/CAD remains on the defensive for the second straight day amid a combination of factors.
• Rebounding oil prices underpin the Loonie and weigh on the pair amid subdued USD demand.
• The downside seems limited amid US-Iran tensions and ahead of the key FOMC rate decision.

The USD/CAD pair is seen consolidating around the 1.4100 mark during the Asian session as traders keenly await the outcome of a two-day FOMC policy meeting, due later this Wednesday. Investors will look for fresh cues about the US Federal Reserve’s (Fed) future policy path, which will play a key role in influencing the near-term US Dollar (USD) price dynamics and provide a fresh impetus to the currency pair.

In the meantime, the USD remains on the defensive below a one-month top, touched on Tuesday, as bulls turn cautious heading into the key central bank event risk. Furthermore, a solid recovery in crude oil prices from an over two-week low underpins the commodity-linked Loonie and turns out to be another factor acting as a headwind for the USD/CAD pair. However, persistent geopolitical uncertainties should support the safe-haven Greenback and limit the downside for the currency pair.

In fact, Iran’s Islamic Revolutionary Guard Corps (IRGC) launched multiple ballistic missiles at US forces in the Middle East on Tuesday. Separately, Central Command said the US military and Saudi Arabian forces conducted joint strikes against Iran-aligned terrorists in Iraq. Moreover, President Donald Trump issued a fresh warning that the US will return to strong military action, targeting key Iranian infrastructure, if diplomatic efforts do not bring a rapid resolution to the crisis in the Middle East.

This marks a fresh escalation of tensions in the Middle East and triggers a fresh leg up in crude oil prices, reviving inflation fears and bolstering bets for at least one interest rate hike by the Fed in 2026. This marks a significant divergence in comparison to the Bank of Canada’s (BoC) dovish bias, which should cap the Canadian Dollar (CAD). Hence, it will be prudent to wait for strong follow-through selling before confirming that the recent USD/CAD recovery from a one-month low has run out of steam.

• USD/CAD slips as easing US-Iran geopolitical tensions reduced safe-haven demand and sparked a market risk-on rally.
• Despite a brief US-Iran pause, markets fear supply disruptions following Houthi attacks on Saudi Red Sea facilities.
• Falling oil prices could weigh on the commodity-linked Canadian Dollar.

USD/CAD depreciates after posting minor gains in the previous trading day, hovering around 1.4080 during the Asian hours on Monday. The pair loses ground as the US Dollar (USD) falls sharply on easing geopolitical tensions following a weekend pause in military hostilities between the US and Iran.

The brief US-Iran pause came after 13 days of escalating conflict. However, market participants remain cautious about potential supply disruptions as Iran-backed Houthis in Yemen claimed responsibility for attacks on Saudi Arabian facilities along the Red Sea.

Reports suggest that the US halted strikes amid growing concerns over depleting interceptor supplies and a shortage of remaining targets within Iran. Additionally, General Dan Caine, Chairman of the Joint Chiefs of Staff, reportedly cautioned President Trump on Friday that continuing the campaign would severely strain critical munitions reserves.

On the policy front, the Fed is widely expected to hold interest rates steady on Wednesday before resuming rate hikes in September, though a minority of market participants still anticipate a surprise move at this week’s meeting.

The downside of the USD/CAD pair is restrained as the commodity-linked Canadian Dollar (CAD) could struggle on lower oil prices. West Texas Intermediate (WTI) oil price opened at a bearish gap, down by over 5%, trading around $84.50 per barrel at the time of writing.