Oil Fuels Canadian Dollar Resilience Amid US Dollar Rebound

The Canadian Dollar is holding firm against the US Dollar as oil prices offset the Greenback's recent rebound.

The USD/CAD pair trades near 1.3874, a level last seen in early June, but its direction remains uncertain due to opposing forces from yields and oil prices.

Rising long-term US Treasury yields have lifted the US Dollar, with the 10-year yield climbing towards 4.75% and the 30-year yield surpassing 5.30% for the first time since 2007.

However, Canada's Consumer Price Index (CPI) rose to 3.0% year-over-year in July from 2.8% in June, but this did not significantly alter market expectations for Bank of Canada policy, with TD Securities still predicting that the BoC will stay on hold through 2026.

The resilience in oil prices is supporting the Canadian Dollar and countering US Dollar strength, with West Texas Intermediate (WTI) crude trading around $84.25 per barrel after a 3.15% gain on Monday.