Oil Price Surge Lifts CAD Amid Geopolitical Tensions

The USD/CAD exchange rate dropped by 0.15% on Monday to around 1.3810, as rising oil prices boosted the Canadian dollar despite broader US dollar strength.

Firmer oil prices were driven up by the Financial Times' report of fresh strikes on Saudi Aramco facilities in Jizan, Saudi Arabia, which pushed West Texas Intermediate (WTI) above $90 to around $90.50, a 1% increase.

Canada's role as a major crude exporter means higher prices can improve export revenue expectations and support the loonie. However, US dollar strength was maintained by Friday's strong Nonfarm Payrolls report, which sustained expectations of a Federal Reserve rate rise at the September meeting.

The recent geopolitical tensions in the Middle East also contributed to safe-haven demand for the greenback, while Canada's domestic economic weakness, including weaker employment data, was somewhat offset by higher oil prices.