The USD/CAD pair moves upward, approaching the 1.3750 level during the Asian session on Tuesday. Iran’s Foreign Minister stated that there is currently “no dialogue” between Tehran and Washington. Increased crude oil prices may bolster the commodity-linked Canadian dollar. The USD/CAD pair shows resilience, climbing to approximately 1.3750 in the Asian trading session on Tuesday. The prevailing uncertainty and the ongoing conflict involving the US and Israel against Iran are contributing to the strengthening of the US Dollar relative to the Canadian Dollar. The initial assessment of the US S&P Global Purchasing Managers Index for March is set to be published later on Tuesday.
Late Monday, US President Trump declared a five-day delay in the scheduled military strikes targeting Iranian energy infrastructure. Trump stated that there are 15 points of agreement between the US and Iran following discussions this weekend, according to reports. Despite Trump’s comments, Iranian officials refuted any discussions with the US. Mohsen Rezaei, the senior military adviser to Iranian Supreme Leader Mojtaba Khamenei, stated that the conflict will persist until Iran obtains complete restitution for the damages incurred.
Indicators of an extended conflict in the Middle East may support safe-haven currencies like the Greenback in the short term. In the meantime, crude oil prices surged as market participants responded to Iran’s rejection of peace negotiations with the United States. Canada stands out as a significant player in the oil export market, and typically, an increase in crude oil prices tends to bolster the CAD.
The US Federal Reserve maintained interest rates at 3.50%–3.75% last week, voicing apprehension regarding the effects of escalating oil prices on inflation. The BoC maintained its key overnight rate at 2.25% during its March meeting, while cautioning that the outlook remains highly uncertain and that the conflict in Iran has increased risks to the global economy.