USD/CAD Breakout? Oil Crash & Safe-Haven Dollar Drive the Move!
The USD/CAD currency pair moved higher on Monday, reaching around 1.3920, as traders rushed to buy the U.S. dollar. This jump comes mainly because oil prices dropped sharply and global tensions increased.
Here’s why the pair is moving:
Oil Trouble: OPEC+ surprised the market by announcing it would increase oil supply by over 500,000 barrels per day in August. This pushed crude oil prices lower. Since Canada’s economy depends heavily on oil exports, the fall in oil hurt the Canadian Dollar (Loonie).
Risk-Off Mood: Reports of new conflict in the Middle East made investors nervous. As a result, many rushed to buy the U.S. dollar as a safe-haven currency, which added more strength to USD/CAD.
Central Bank Buzz: There are talks that the U.S. Federal Reserve might pause its rate cuts, while the Bank of Canada could also slow down on reducing interest rates. This contrast in policy expectations is helping support the U.S. dollar.
There’s no major data release today, so traders will likely watch oil prices and global news closely. Wednesday’s Fed meeting minutes could also impact the pair.
Impact:
USD/CAD might stay strong if oil prices remain weak. But a rebound in oil or signs of a Fed rate cut could possibly pull the pair back down.