Canadian Dollar softens as Gulf peace hopes weigh on Oil prices
- USD/CAD trades near two-month highs as the Canadian Dollar struggles to benefit from a softer US Dollar.
- Iran says military operations against Israel have ended, while US-Iran peace talks remain ongoing.
- Traders await BoC and Fed policy decisions amid rising inflation concerns.
USD/CAD trades in a narrow range on Monday, with the Canadian Dollar (CAD) struggling to capitalize on a softer US Dollar (USD) as a mild pullback in Crude Oil prices weighs on the commodity-linked Loonie. At the time of writing, the pair trades around 1.3950, holding near two-month highs.
The US Dollar and Oil prices both moved lower after Iran's Fars News Agency reported that Iran had ended its military operations against Israel. The development came after tensions escalated over the weekend, with Iran and Israel exchanging strikes for the first time since the ceasefire announced in April.
West Texas Intermediate (WTI) Crude Oil trades around $90 per barrel after touching an intraday high of $93.50 earlier in the day.
The headlines helped keep hopes alive that a broader peace agreement in the Gulf region can still be reached. US President Donald Trump also sought to reassure markets, saying that peace talks between the United States and Iran remain ongoing. However, Trump warned that the US naval blockade of Iranian ports would remain in place until a final agreement is reached.
Beyond geopolitics, traders are turning their attention to upcoming central bank meetings. The Bank of Canada (BoC) is set to announce its policy decision on Wednesday and is widely expected to leave interest rates unchanged at 2.25% for a fifth consecutive meeting.
While inflation accelerated in April, it came in below market expectations, suggesting price pressure remains broadly contained. Meanwhile, the labor market staged a sharp turnaround in May, with employment growth beating forecasts and the unemployment rate declining.
Together, the data support the case for the BoC to remain on hold as policymakers assess the impact of slowing economic growth after Canada entered a technical recession following two consecutive quarters of contraction.
In the United States, traders are awaiting inflation data due later this week ahead of next week's Federal Reserve (Fed) policy decision. Inflation has drifted further away from the Fed's 2% target since the US-Iran war triggered a sharp rise in Oil prices, while the labor market has shown signs of stabilization following last week's stronger-than-expected Nonfarm Payrolls report.
Markets are fully pricing in a pause at next week's meeting, but expectations for another rate hike later this year have increased as investors reassess the inflation outlook.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.15% | 0.00% | -0.11% | 0.09% | -0.09% | -0.40% | 0.16% | |
| EUR | 0.15% | 0.14% | 0.02% | 0.23% | 0.06% | -0.18% | 0.29% | |
| GBP | -0.01% | -0.14% | -0.15% | 0.08% | -0.13% | -0.35% | 0.13% | |
| JPY | 0.11% | -0.02% | 0.15% | 0.19% | -0.01% | -0.22% | 0.24% | |
| CAD | -0.09% | -0.23% | -0.08% | -0.19% | -0.19% | -0.42% | 0.04% | |
| AUD | 0.09% | -0.06% | 0.13% | 0.00% | 0.19% | -0.23% | 0.25% | |
| NZD | 0.40% | 0.18% | 0.35% | 0.22% | 0.42% | 0.23% | 0.46% | |
| CHF | -0.16% | -0.29% | -0.13% | -0.24% | -0.04% | -0.25% | -0.46% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
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