Investing.com — The Canadian dollar edged higher on Tuesday as the U.S. dollar softened against the loonie, while a sharp retreat in oil prices after signs of improving Middle East supply prospects kept gains in the commodity-linked currency in check.
USD/CAD was last around C$1.4027, down about 0.06% on the day, indicating a modest rise in the Canadian dollar. The pair has traded between C$1.4025 and C$1.4044 after opening at C$1.4035.
The move came as oil prices fell sharply after Iran offered to reopen the Strait of Hormuz within seven days if the United States eases military pressure and lifts its blockade on Iranian ports. Brent crude fell to around $98 a barrel, while WTI also declined.
Lower oil prices can weigh on the Canadian dollar given Canada’s large energy-export exposure, although they also reduce the inflationary pressure that had complicated the outlook for central banks.
The loonie remains close to recent lows after weakening steadily through September. Bank of Canada data showed USD/CAD rising from 1.3784 on Sept. 8 to 1.4021 on Sept. 21, underscoring the currency’s broader decline this month.
The currency is also being pulled in opposite directions by monetary-policy expectations. The Federal Reserve’s hawkish stance has supported the U.S. dollar, while Bank of Canada Governor Tiff Macklem has warned that persistently high energy prices could push Canadian inflation higher.
Related articles
Canadian dollar edges higher as oil retreat eases inflation concerns
Canadian dollar under pressure as oil retreats and US rate outlook supports greenb
Canadian dollar extends slide as wider yield gap weighs on loonie
