The USD/CAD pair has softened to approximately 1.3835 during the early Asian session on Wednesday. Trump has consented to halt military actions against Iran for a duration of two weeks. The FOMC Minutes are set to be the focal point later on Wednesday. The USD/CAD pair experiences a decline, reaching approximately 1.3835 in the early hours of trading on Wednesday in Asia. The US Dollar shows signs of weakening against the Canadian Dollar following Iran’s agreement to a two-week ceasefire with the United States.
An Iranian official announced late Tuesday the acceptance of a two-week ceasefire, with negotiations set to commence on Friday in Islamabad, Pakistan. This decision followed a statement from US President Donald Trump indicating that he would halt attacks, contingent upon Tehran’s agreement to completely reopen the Strait of Hormuz. Iran’s Foreign Minister Abbas Araghchi announced that safe passage through the crucial waterway will be achievable for a duration of two weeks through coordination with Iranian armed forces.
The Greenback sees a wave of selling pressure in light of these headlines. Market participants are closely monitoring the upcoming release of the Federal Open Market Committee Minutes scheduled for later on Wednesday. The report may provide valuable perspectives on how officials assess the recent energy shock resulting from conflicts in the Middle East. Any hawkish remarks from Federal Reserve officials may serve to constrain the USD’s losses in the short term.
Meanwhile, crude oil prices have dropped below $100 as Iran consents to permit safe passage through the Strait of Hormuz amid the ceasefire. This may exert pressure on the commodity-linked Loonie. Canada stands out as a significant player in the oil export market, and typically, a decline in crude oil prices tends to adversely affect the CAD.