Oil Strength Supports Loonie Amid US-Iran Tensions

The Canadian Dollar (CAD) has seen an uptick in value as oil prices continue to rise, offsetting the impact of a weak jobs report in Canada. The USD/CAD pair is trading at 1.3813, down 0.15% from its previous level.

Last week's employment data showed that Canada lost 41.7K workers, while the Unemployment Rate remained steady at 6.4%. This was in contrast to a strong Nonfarm Payrolls report in the US, which saw July's print provide a boost to the economy.

The escalation of the US-Iran war has increased upward pressure on energy prices, further supporting the CAD. The Federal Reserve is expected to raise interest rates by 25 basis points, with odds at 63% for a hike to 3.75-4%. In contrast, the Bank of Canada (BoC) had priced in a near 70% chance of holding rates at 2.25%, with only a slim 30% chance of a rate hike.

The release of inflation data on Thursday and Friday will provide clues about the status of the economy, which is expected to influence the USD/CAD pair.