- USD/CAD holds ground as the US Dollar remains firm on safe-haven demand amid persistent US–Iran conflict uncertainty.
- US intercepted two Iranian supertankers evading its blockade, as Tehran threatens vessels in the Strait of Hormuz.
- Higher energy prices raise the likelihood of a more hawkish Bank of Canada stance.
USD/CAD remains flat following a three-day winning streak, trading around 1.3700 during the Asian hours on Friday. The pair steadies as the US Dollar (USD) maintains its position as safe-haven demand increases amid persistent uncertainty surrounding the United States (US)–Iran conflict.
Bloomberg reported on Thursday that the US military intercepted two Iranian oil supertankers attempting to evade its blockade, as Washington presses ahead with efforts to curb Iran’s shipping while Tehran continues to threaten vessels in the Strait of Hormuz. US military officials are also preparing contingency plans to target Iran’s capabilities in the Strait should the current ceasefire collapse.
US President Donald Trump warned that if Iran does not move its oil, its infrastructure would be targeted. Iranian officials, however, denied agreeing to any extension of the truce and accused Washington of breaching it by maintaining a naval blockade on Iranian trade.
The Greenback also found additional support from resilient US economic data. Weekly Initial Jobless Claims rose to 215K from 212K, indicating continued strength in the labor market. Meanwhile, S&P Global PMIs surprised to the upside, with Manufacturing at 54.0 and Services at 51.3, pointing to sustained expansion in business activity.
The latest data showed that higher energy prices lifted Canada’s annual consumer inflation by 0.6% to 2.4% in April, in line with Bank of Canada (BoC) warnings that rising energy costs are feeding into inflation expectations.
Elevated energy prices have increased the likelihood of a more hawkish response from the Bank of Canada. Oil and refined product prices moved sharply higher as commercial vessels transiting the Strait of Hormuz came under attack from both the US and Iran, reinforcing the risk of prolonged disruptions to tanker flows from the region.
