CAD Firms as Geopolitical Calm Pressures USD
The Canadian dollar (CAD) has firmed up against its US counterpart, as easing geopolitical tensions have reduced safe-haven demand for the USD. The pause in hostilities between the US and Iran has triggered a risk-on rally in markets, weighing on the USD.
The WTI crude oil price opened with a bearish gap of over 5% at $84.50 per barrel, limiting further downside in the USD/CAD exchange rate. This is because the Canadian dollar is a commodity-linked currency and may struggle amid weaker oil prices.
Market expectations point to the Federal Reserve leaving interest rates unchanged on Wednesday, with investors anticipating that rate hikes will resume in September. However, some market participants still see a possibility of a surprise move at this week's meeting.