USD/CAD Steady as Oil Prices Rebound and US Jobs Data Surprises
The USD/CAD exchange rate remained relatively stable near 1.3830 in Asian trading on Monday, following modest gains the previous day.
Rising crude prices could support the commodity-linked CAD, as Canada is a major oil exporter. WTI crude rebounded towards $90.00 a barrel after US-Iran tensions escalated, with the US targeting three Iranian tankers and Tehran declaring a new restricted zone around the Strait of Hormuz.
The strong US jobs data in August, which saw 162,000 new hires versus expectations of 56,000, further supported the USD. The CME FedWatch tool now prices a 58.3% probability of a 25-basis-point Fed rate increase in September.
Historically, when WTI crude spikes towards $90 due to geopolitical chokepoints, the commodity-linked Canadian Dollar gains significant upward momentum. To prepare for potential volatility, derivative traders are advised to use short-term option strategies like straddles or bear put spreads.