USD/CAD softens to approximately 1.4165 during Thursday’s Asian session. US and Iran exchange strikes for a second consecutive day following Trump’s declaration that the ceasefire is ‘over.’ Traders increased their expectations regarding a potential interest rate hike by the Bank of Canada this year. The USD/CAD pair declines to approximately 1.4165 during the Asian trading hours on Thursday. A rise in crude oil prices provides some support to the commodity-linked Canadian Dollar against the US Dollar. Traders are anticipating the release of the US weekly Initial Jobless Claims report later on Thursday.
Source reported that the US strikes targeted a rail line in Golestan province in northeastern Iran, close to the border, employing cruise missiles. It represented the inaugural US assault on Iranian infrastructure following the establishment of the ceasefire. Iran reported that several US artillery shells hit a railway bridge located west of Aghala in Golestan early Thursday, resulting in multiple explosions. Earlier, US President Donald Trump stated that an interim agreement to conclude the conflict with Iran was “over.” Iranian Parliament speaker Mohammad Bagher Ghalibaf cautioned Washington that any military action by the U.S. will elicit a response. 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 Canadian dollar.
“The CAD has performed relatively well through the overnight volatility,” Shaun Osborne and Eric Theoret said in a note. Negative CAD sentiment is moderating; however, the spot remains considerably elevated. The Bank of Canada has opted to maintain its benchmark overnight interest rate at 2.25% during its June policy meeting, representing the fifth consecutive instance of rate stability. Traders now estimate approximately a 60% probability that the Bank of Canada will increase interest rates this year, a notable rise from the 40% observed on Tuesday, according to swap market data.