USD/CAD Pairs Weakens Amid Ongoing Geopolitical Tensions
The USD/CAD pair continues to trade near its three-month low due to a combination of negative factors, including weak US Dollar (USD) and higher crude oil prices.
Crude oil prices have been steady near a three-week high amid the ongoing US-Iran standoff over the Strait of Hormuz and Yemen's declaration of a maritime blockade on Saudi shipping in late July. This has led to increased geopolitical risk premiums, supporting black gold prices.
The commodity-linked Canadian Dollar (CAD) is benefiting from these higher oil prices, which are underpinning its value. The USD/CAD pair remains vulnerable to further losses as it continues to trade near a three-month low.
US inflation data released last week pointed to easing price pressures, reducing the likelihood of an immediate rate hike by the US Federal Reserve (Fed). This has kept the USD Index (DXY) depressed near its lowest level since May 14.
The release of monthly Canadian Retail Sales data and flash US PMIs are expected to provide some impetus heading into the weekend. Geopolitical headlines may continue to infuse volatility and create short-term opportunities.