Canadian Dollar weakens amid falling oil prices, stronger US Dollar
USD/CAD extends its gains for the fifth consecutive day, trading around 1.4140 during Asian hours on Friday. The pair appreciates as the commodity-linked Canadian Dollar (CAD) faces downward pressure from falling crude oil prices.
The Canadian Dollar slipped against the US Dollar amid a drop in oil prices and a stronger Greenback. Falling crude oil prices, following reports of a potential agreement between the US and Iran, weighed on the commodity-linked Canadian Dollar. Meanwhile, hawkish signals from Federal Reserve officials bolstered the US Dollar. Data from the CME FedWatch Tool showed a near 67.5% probability of an October rate hike, up from 55.4% a week prior.
Fed Governor's Paulson delivered a hawkish speech, emphasizing the need for further interest rate hikes to combat stubbornly high inflation. The US Dollar's strength, driven by the Fed's stance and oil-driven inflation concerns, pressured non-yielding assets like gold. The Treasury Department announced a $6 billion buyback of long-term Treasuries to curb rising yields.
The Bank of Japan raised its short-term interest rate target to 1.25% from 1.00%, signaling a shift in monetary policy.
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