The USD/CAD pair is experiencing a slight upward trend above the mid-$1.3700 range during the Asian trading session on Monday. However, it’s still below the peak it reached last Friday. The US dollar’s steady demand is helping drive prices up, while increasing oil prices support the Canadian dollar, which puts a cap on further gains.
“The clock is ticking,” U.S. President Donald Trump warned on Truth Social Sunday, cautioning Iran that “there will be nothing left” if it doesn’t act quickly, emphasizing that “time is of the essence.” Additionally, the Times of Israel noted that the U.S. and Israel are preparing their militaries for potential renewed coordinated operations against Iran. This situation heightens the risk of escalating tensions in the Middle East and, along with the practical closure of the Strait of Hormuz, has pushed oil prices to their highest levels in two weeks.
On another note, rising energy prices are also amplifying inflation fears and increasing expectations that the Federal Reserve may adopt a more aggressive approach to interest rates. According to CME Group’s FedWatch tool, there is currently over a 50% likelihood that rates will rise before the year ends. At the same time, ongoing geopolitical uncertainties have helped the safe-haven US dollar reach its highest point since April 7, offsetting some adverse factors and bolstering the USD/CAD pair. This seems to favor bullish trends and supports further gains in stock prices.
No major economic indicators from the U.S. or Canada are set to be released today. Nevertheless, ongoing developments related to the Middle East crisis are likely to keep financial markets volatile and may drive oil prices higher. Additionally, the trend in the USD could present short-term trading opportunities with the USD/CAD pair. Still, the overall outlook suggests that the most straightforward path for prices continues to lean upwards.
