- USD/CAD falls as the US Dollar weakens on improved sentiment amid Middle East de-escalation hopes.
- Trump said the war is “close to over,” with reports suggesting a possible two-week ceasefire extension.
- Easing energy prices eased inflation concerns and reduced expectations of further tightening.
USD/CAD loses ground for the fourth successive day, trading around 1.3730 during the Asian hours on Thursday. The pair depreciates as the US Dollar (USD) continues to lose ground on improved market sentiment, driven by expectations of a potential de-escalation in the Middle East conflict.
US President Donald Trump stated that the war was “close to over.” A Bloomberg report indicated speculation about a possible two-week extension of a ceasefire, although Trump dismissed the necessity of such a move, citing ongoing negotiations aimed at ending the conflict.
The Greenback faced additional pressure from easing energy prices, which helped ease inflation concerns and tempered expectations of further central bank tightening. The Federal Reserve (Fed) is widely anticipated to hold interest rates steady this month and possibly for the rest of the year.
However, the downside of the USD/CAD pair could be restrained as the commodity-linked Canadian Dollar (CAD) may face challenges with easing oil prices. It is important to note that Canada is the largest crude exporter to the United States (US).
Reports suggested that Washington and Tehran are considering extending their two-week ceasefire to allow more time for peace negotiations, even as the Strait of Hormuz remains effectively shut under a dual blockade. However, Tehran may permit vessels to transit freely via the Omani side of the Strait if an agreement is reached to prevent a renewed escalation in hostilities.
