Euro Sinks Against CAD as Oil Prices Surge and Rate Hike Bets Rise

The Euro (EUR) has weakened against the Canadian Dollar (CAD) due to rising risk aversion, escalating Middle East conflicts, and soaring oil prices. The Canadian Dollar benefits from elevated energy prices and ongoing logistical bottlenecks in the Strait of Hormuz.

The hot US consumer inflation data released last week drove market pricing for an upcoming Federal Reserve rate hike to 87%, according to the CME FedWatch tool. This has intensified pressure on the Federal Reserve to tighten monetary policy further.

European Central Bank (ECB) Governing Council member Gediminas Simkus stated that the possibility of monetary policy actions at every upcoming meeting cannot be ruled out, emphasizing the need to closely evaluate energy prices ahead of the October policy meeting.