USD/CAD Strengthens as Oil Prices Fall, BoC Rate Hike Looms
The USD/CAD pair has strengthened to around 1.4020 during early European trading hours on Monday, as falling crude oil prices weigh on the commodity-linked Canadian Dollar.
Oil prices dropped after traders kept watch for a recovery in shipments from Saudi Arabia despite attacks by Iran-backed Houthis over the weekend, according to CNBC. Canada is a major oil-exporting country, and low crude oil prices generally have a negative impact on the CAD.
Bank of Canada Governor Tiff Macklem may reaffirm his hawkish tone adopted following the bank's meeting earlier this month when he speaks later on Monday, Scotiabank strategists said. The Canadian central bank decided to keep its key policy rate unchanged at 2.25% in September, but noted that inflation risks had risen and new tariffs made the growth outlook more uncertain.
Traders see nearly a 60% chance of a BoC hike at its next policy announcement on October 28, which could provide some anchoring for the CAD.