- USD/CAD rises as safe-haven demand increases on renewed geopolitical risks.
- US captured Venezuelan President Nicolas Maduro, with Trump saying Washington would oversee a safe, orderly transition.
- The commodity-linked CAD may strengthen amid potential gains in Oil prices.
USD/CAD extends its gains for the second successive session, trading around 1.3750 during the Asian hours on Monday. The pair appreciates as the US Dollar (USD) strengthens on safe-haven demand, driven by a renewed rise in geopolitical risks following the United States’ (US) capture of Venezuelan President Nicolas Maduro. US President Donald Trump said that the US would oversee Venezuela until a safe, orderly, and judicious transition could take place, per CNN.
The Guardian reported on Monday that President Trump warned Washington could launch a new military intervention if Venezuela’s interim president, Delcy Rodríguez, failed to meet US demands. He also made remarks about Colombia’s leadership, floated the idea of “Operation Colombia,” criticized Mexico for not getting its act together, and suggested Cuba appeared close to collapse.
Traders expect two additional Federal Reserve rate cuts in 2026. Federal Open Market Committee (FOMC) December Meeting Minutes suggested that most participants judged that it would likely be appropriate to stand on further rate cuts if inflation declined over time. Markets are bracing for US President Donald Trump to nominate a new Fed chair to replace Jerome Powell when his term ends in May, a move that could tilt monetary policy toward lower interest rates.
The upside of the USD/CAD pair could be capped as the commodity-linked Canadian Dollar (CAD) could strengthen on potential gains in Oil prices. However, West Texas Intermediate (WTI) Oil price remains steady after experiencing volatility, trading around $57.20 per barrel at the time of writing.
Traders evaluated the fallout from the US attack on Venezuela, with markets weighing risks to regional crude supply. However, some analysts expect limited disruption, noting Venezuela produces under 1 million barrels per day, less than 1% of global output.
