USD/CAD Consolidates Near Weekly High Amid Conflicting Signals

The USD/CAD currency pair is consolidating near its weekly high, trading in the 1.3875-1.3880 band during the Asian session on Thursday.

This consolidation comes as traders weigh conflicting fundamental signals, with improved sentiment around the reopening of the Strait of Hormuz not fully removing supply concerns and the ongoing Russia-Ukraine conflict providing a floor for crude oil prices.

The Canada-US trade tensions are also limiting the Loonie's ability to advance more decisively. Meanwhile, a slightly stronger-than-expected inflation reading in the US has kept expectations of additional Federal Reserve policy tightening alive, allowing the US Dollar to hold onto its prior gains and remain supportive for USD/CAD.

The Russia-Ukraine war has entered a new phase with both sides deploying long-range drones and missiles, adding fresh uncertainty to energy markets. The Strait of Hormuz agreement between Iran and Oman is also seen as supportive for crude oil prices, indirectly underpinning the Canadian Dollar.