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Canadian Dollar pressured by renewed US Dollar strength despite elevated Oil prices

  • USD/CAD trades near one-month highs, while the US Dollar Index advances to its strongest level in two weeks.
  • Stronger US inflation and Retail Sales data boost expectations for a possible Fed rate hike by year-end.
  • Higher Crude Oil prices linked to Middle East supply concerns are helping support the Canadian Dollar, limiting broader gains in USD/CAD.

USD/CAD extends gains on Thursday, rising for a third consecutive day, supported by renewed demand for the US Dollar (USD) as traders assess ongoing geopolitical developments alongside the latest US economic data, which reinforced expectations of a more hawkish Federal Reserve (Fed) stance.

At the time of writing, the pair is up 0.12% on the day, trading around 1.3723, close to one-month highs. However, elevated Oil prices linked to supply disruptions in the Middle East continue to provide underlying support to the commodity-linked Canadian Dollar (CAD), limiting stronger upside moves in USD/CAD.

Investors are closely monitoring the two-day summit in Beijing between US President Donald Trump and Chinese President Xi Jinping, where both leaders discussed trade, increasing bilateral investment and the ongoing Iran war. Trump told Fox News earlier on Thursday that Xi Jinping offered to help on Iran and said he wants to see the Strait of Hormuz reopened.

Meanwhile, US-Iran peace talks remain deadlocked, with no near-term breakthrough in sight as both sides continue to disagree over Tehran’s nuclear program.

On the data front, US Retail Sales rose 0.5% MoM in April, matching market expectations but slowing sharply from March’s 1.6% increase. The Retail Sales Control Group, which feeds directly into Gross Domestic Product (GDP) calculations, also increased 0.5% in April after rising 0.8% previously.

The data follows hotter-than-expected US Consumer Price Index (CPI) and Producer Price Index (PPI) reports earlier this week, which showed inflation accelerated sharply in April, largely driven by higher energy prices.

Traders have dialed up bets that the Fed could deliver an interest rate hike by year-end following the latest batch of US economic data. According to the CME FedWatch Tool, markets are currently pricing in a roughly 42% probability of a rate hike at the December meeting, up from around 33% a day earlier.

Growing expectations of a more hawkish Fed have pushed US Treasury yields sharply higher in recent days while also boosting demand for the US Dollar. Ongoing tensions in the Middle East are providing additional support to the Greenback through safe-haven flows.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.78, its highest level in two weeks.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the British Pound.

USDEURGBPJPYCADAUDNZDCHF
USD0.27%0.74%0.19%0.12%0.48%0.29%0.13%
EUR-0.27%0.44%-0.13%-0.16%0.15%-0.01%-0.12%
GBP-0.74%-0.44%-0.57%-0.61%-0.27%-0.45%-0.56%
JPY-0.19%0.13%0.57%-0.08%0.28%0.09%-0.07%
CAD-0.12%0.16%0.61%0.08%0.37%0.16%0.06%
AUD-0.48%-0.15%0.27%-0.28%-0.37%-0.18%-0.27%
NZD-0.29%0.01%0.45%-0.09%-0.16%0.18%-0.12%
CHF-0.13%0.12%0.56%0.07%-0.06%0.27%0.12%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Author

Vishal Chaturvedi

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.

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