Canadian Dollar Gains Support from Higher Oil Prices Amid Saudi Pipeline Disruptions
The Canadian Dollar (CAD) gained support from higher oil prices amid Saudi pipeline disruptions.
A drone attack forced Saudi Arabia to shut down a major crude pipeline, impacting a critical route traditionally used to bypass the Strait of Hormuz.
Oil prices are rising toward nearly four-month highs following the disruption, which has heavily impacted aggregate demand for the Canadian Dollar.
Analysts at Scotiabank note that front-end rate differentials are providing some support for the currency, observing that 'front-end US/Canada spreads have held quite stable in the past few days.'
The USD/CAD pair may rebound as the US Dollar (USD) gains support amid aggressive Federal Reserve (Fed) rate-hike bets for Wednesday's decision following hotter US inflation reports.