USD/CAD drifts higher to approximately 1.4165 during the Asian session on Monday. The US initiated a fresh series of strikes against Iran with the objective of ‘degrading’ its military capabilities. The Bank of Canada is expected to maintain the current interest rate during the upcoming meeting on Wednesday. The USD/CAD pair is experiencing an uptick, approaching 1.4165, effectively breaking a four-day losing streak during the Asian trading hours on Monday. The US Dollar strengthens against the Canadian Dollar amid lingering tensions regarding the US-Iran conflict. The US June Consumer Price Index inflation report is set to be the focal point later on Tuesday.
The US military executed several strikes throughout Iran, asserting that these actions were intended to “degrade” Tehran’s capacity to interfere with commercial shipping in the Strait of Hormuz, according to reports. The Islamic Revolutionary Guard Corps subsequently initiated retaliatory drone and missile strikes on US allies throughout the Middle East, encompassing Kuwait, Jordan, Qatar, Bahrain, and Jordan. Over the weekend, Iran announced that the Strait of Hormuz would be closed “until further notice.” Signs of escalating tensions in the Middle East could enhance the appeal of a safe-haven currency like the Greenback relative to the CAD in the near term.
Conversely, a Canadian jobs report that exceeds expectations may lend some support to the Loonie. Data released by Statistics Canada on Friday indicated that Canada’s economy experienced an addition of 18.2K jobs in June, sustaining the momentum observed in the job market from the previous month. This figure followed a rise of 87.8K in May and exceeded the market consensus of 10K. The Unemployment Rate decreased to 6.5% in June, down from 6.6% in May, surpassing the anticipated figure of 6.6%.
The Bank of Canada is expected to maintain its overnight rate at 2.25% during the upcoming July policy meeting on Wednesday, with projections indicating that this rate will persist well into the following year. This outlook is supported by the prevailing containment of price pressures and a gradual recovery of the economy, according to a poll.