USD/CAD declines to approximately 1.4005 during the Asian session on Monday. Iran announced that it aimed at US aircraft located in Jordan. Cooling in June’s US inflation data significantly reduced the immediate likelihood of a Fed rate hike in July. The USD/CAD pair continues to decline, approaching 1.4005 during the Asian trading hours on Monday. Increasing crude oil prices lend support to the commodity-linked Canadian Dollar in its exchange rate with the US Dollar. Traders prepare for the forthcoming release of Canada’s Consumer Price Index inflation data later on Monday.
The Guardian reported on Monday that US President Donald Trump stated that the latest US strikes on Iran were conducted in honour of US service members who had been killed in recent days. Meanwhile, Iran’s Islamic Revolutionary Guard Corps asserted that the Strait of Hormuz will remain unsafe for petrochemical products or any transit of oil and gas as long as US actions in the region persist. The Iranian military reported that it aimed ballistic missiles at US aircraft located at Jordan’s Aqaba airport.
Air raid sirens echoed throughout Bahrain following Iran’s latest offensive, which involved a series of ballistic missiles and one-way attack drones aimed at locations in Bahrain, Jordan, Kuwait, and Iraq. It is important to recognise that Canada stands as a significant player in the oil export market, with elevated crude oil prices typically exerting a favourable influence on the value of the Loonie. Traders are scaling back their expectations for a US interest rate increase in July, following indications of easing inflation in the United States, a development that may exert downward pressure on the Greenback.
The probability of a Federal Reserve rate hike in July is currently assessed at 14%, a decrease from the 25% implied chance observed the previous week, as indicated by the CME FedWatch tool. However, Fed Governor Christopher Waller cautioned that policymakers must observe “several months” of consistent cooling before considering the removal of rate hikes from the agenda.