Canadian Dollar Rides Oil Rebound Amid US-Iran Peace Hopes
Crude oil prices have rebounded slightly from an over three-week low after missile attacks on Saudi oil tankers in the Red Sea by Iran-backed Houthis in Yemen. This has led to concerns about supply disruptions through a key route, supporting the commodity-linked Canadian Dollar (CAD). The CAD remains on the front foot against the US Dollar (USD) as investors remain hopeful for a potential US-Iran peace deal.
The proposed framework for commercial shipping through the Strait of Hormuz between Iran and Oman adds to the optimism surrounding diplomatic resolution to end the five-month-old US-Iran war. This, along with receding US Federal Reserve (Fed) rate hike bets, is hindering the USD's ability to attract buyers.
Traders are hesitant to place aggressive bets ahead of the crucial monthly jobs reports on Friday, which will include the Canadian employment details and the popularly known US Nonfarm Payrolls (NFP) report. The mixed fundamental backdrop makes it prudent to wait for some follow-through selling before positioning for a resumption of the USD/CAD pair's downfall from the June swing high.