USD/CAD Surges Above 1.4100 as Oil Prices Tumble and Fed Hike Expectations Rise
The USD/CAD exchange rate has broken above 1.4100 for the fifth consecutive day, driven by a combination of factors including a decline in crude oil prices and rising expectations for a US Federal Reserve interest rate hike.
The price drop in oil is attributed to reports that the United States and Iran are exploring a phased framework to reopen the Strait of Hormuz and ease port blockades. This development has reduced some geopolitical risk premium embedded in crude benchmarks, pressuring oil prices and the commodity-linked Canadian Dollar.
Meanwhile, the US Dollar is gaining strength due to hawkish expectations for Federal Reserve policy, with market pricing assigning a 67.5% probability to a benchmark interest rate increase in October, up from 55.4% a week ago and 11% a month earlier.