S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
- USD/CAD struggles to capitalize on the overnight recovery gains amid a combination of diverging forces.
- The US-Iran statement benefits the safe-haven USD, while bullish Crude Oil prices underpin the Loonie.
- Traders also seem reluctant and opt to move to the sidelines ahead of the crucial BoC/FOMC decisions.
The USD/CAD pair seesaws between tepid gains/minor losses, below the 1.3700 mark, during the Asian session on Wednesday amid a combination of diverging forces. The lack of progress in US-Iran peace talks continues to benefit the US Dollar’s (USD) reserve currency status and supports spot prices. However, bullish Crude Oil prices underpin the commodity-linked Loonie and cap the upside for the currency pair.
Hopes for a revival of US-Iran peace talks receded after US President Donald Trump canceled his special envoy’s planned visit to Pakistan. Furthermore, media reports suggest that Trump was dissatisfied with Iran’s new proposal on resolving the war and reopening the strategic waterway, but would set aside discussion of Iran’s nuclear program. This keeps geopolitical risks in play and continues to benefit the safe-haven USD, which, in turn, is seen as a key factor acting as a tailwind for the USD/CAD pair.
Meanwhile, shipping traffic through the Strait of Hormuz remains blocked due to Iran’s restrictions on movements and the US naval blockade of Iranian ports. Adding to this, the Wall Street Journal reported that Trump has instructed aides to prepare for an extended blockade of Iran, aimed at forcing Tehran to dismantle its entire nuclear program. This keeps Crude Oil prices elevated near the highest level in over two weeks and keeps a lid on any meaningful appreciating move for the USD/CAD pair.
Traders also seem reluctant to place aggressive directional bets and opt to wait on the sidelines ahead of key central bank events. The Bank of Canada (BoC) will announce its policy decision later during the North American session, and will be followed by the outcome of a two-day FOMC meeting. Market participants will look for fresh cues about the central banks’ future policy path, which, in turn, should provide a fresh impetus to the USD/CAD pair and determine the next leg of a directional move.
