USD Rebound Counteracts Higher Oil Prices for Canadian Dollar
The Canadian Dollar (CAD) pulled back from its two-month high as the US Dollar (USD) rebounded, countering higher oil prices. The USD/CAD pair recovered some of Friday's losses to reach the 1.3925 area, a nearly two-month low.
Investors are looking past last week's disappointing US Nonfarm Payrolls report and instead focusing on the ongoing US-Iran standoff, which keeps the geopolitical risk premium in play and supports the safe-haven USD. Additionally, bets that the Federal Reserve will raise borrowing costs by the end of this year due to inflation risks from recovering crude oil prices are lending support to the Greenback.
The Canadian Dollar could benefit from a strong domestic jobs report released on Friday, which might hold back traders from placing aggressive bullish bets on the USD/CAD pair and cap any meaningful gains. However, it's prudent to wait for strong follow-through buying before confirming that the recent pullback has run its course.