Canadian Dollar Slides on Hopes of US-Iran Deal
The Canadian Dollar (CAD) weakened against the US Dollar (USD) on Tuesday as Oil prices slid due to hopes of a US-Iran deal. This development weighed heavily on the commodity-linked CAD, which is sensitive to Oil price movements. West Texas Intermediate (WTI) prices dropped nearly 4% on the day and fell to their lowest level since July 13 at $75.50.
The decline in Oil prices also eased energy-driven inflation pressures, reducing the need for central banks to maintain restrictive monetary policy or consider raising interest rates. The Federal Reserve (Fed) saw its rate hike expectations fall to 58.9% from 67.2%, with Chicago Fed President Anna Paulson stating that 'we want to bring down' inflation.
Meanwhile, lower Oil prices could also take pressure off the Bank of Canada (BoC), which previously warned that persistently high energy costs could require consecutive rate hikes. Traders are awaiting labour market data from both the United States and Canada, including US JOLTS Job Openings on Tuesday and US Nonfarm Payrolls on Friday.