USD\/CAD fell for a fourth day, trading near 1.3708, its lowest level since 23 March, as higher oil prices supported the Canadian Dollar. The US Dollar Index traded near 98.20, ending an eight-day losing run but staying close to six-week lows.<\/p>\n
Oil prices stayed elevated amid ongoing disruption to supply through the Strait of Hormuz during a dual blockade by US forces and Iran. Iranian state media said any future transit tolls would be processed via Iranian banks, pointing to tighter control over the route.<\/p>\n
West Texas Intermediate crude rebounded after a two-day decline, trading around $90.50. Canada\u2019s currency often tracks oil because Canada is a major crude exporter.<\/p>\n
Markets watched for confirmation of a second round of US-Iran talks after Donald Trump said negotiations could resume this week, following talks in Islamabad that did not produce a breakthrough. Higher energy costs kept inflation risks in view, with Canada\u2019s inflation below the Bank of Canada\u2019s 2% target.<\/p>\n
US inflation stayed above the Federal Reserve\u2019s 2% target, with March CPI at 3.3% year on year versus 2.4%. US initial jobless claims fell to 207K versus 215K expected, while industrial production fell 0.5% month on month against a 0.1% rise forecast.<\/p>\n
We remember looking at this situation last year, in 2025, when disruptions in the Strait of Hormuz pushed WTI crude oil above $90 a barrel. This geopolitical tension was the primary driver strengthening the Canadian dollar and pushing the USD\/CAD pair down towards 1.3700. The market’s focus was squarely on the US-Iran talks and the risk of a prolonged supply shock.<\/p>\n
Fast forward to today, April 16, 2026, and the theme of elevated energy prices remains firmly in place. WTI crude is currently trading around $85 per barrel, supported by ongoing Middle East tensions and disciplined OPEC+ supply cuts that have kept inventories tight. Similar to last year, this has provided a floor for the Canadian dollar, keeping USD\/CAD hovering near the same 1.3750 level.<\/p>\n
The key difference now is the inflation picture, which has evolved since 2025. While US inflation remains persistent at 3.5% as of March, Canadian inflation has accelerated to 2.9%, much higher than the sub-2% levels seen last year. This reduces the policy divergence between the Fed and the Bank of Canada, making a straightforward short USD\/CAD trade less compelling than it was in 2025.<\/p>\n
For derivatives traders, this persistence of geopolitical risk premium in oil suggests volatility is undervalued. Buying straddles or strangles on crude oil futures or related ETFs could be a prudent way to position for a sharp price move in either direction if tensions escalate or de-escalate unexpectedly. The premium paid is the maximum risk for a potentially significant reward.<\/p>\n
Given that both central banks are now grappling with sticky inflation, the USD\/CAD pair may be more range-bound than it was last year. This environment makes selling options attractive, and traders might consider strategies like an iron condor on USD\/CAD futures. This position would profit from the pair trading sideways and experiencing low volatility in the coming weeks.<\/p>\n
We only need to look back to the energy price spike in 2022 to be reminded of how quickly geopolitical events can reshape the market. Therefore, a small allocation to cheap, out-of-the-money call options on WTI crude could serve as an effective, low-cost hedge. This provides upside exposure in case the situation in the Strait of Hormuz deteriorates suddenly, mirroring the fears we held this time last year.<\/p>\n","protected":false},"excerpt":{"rendered":"
USD\/CAD hit March lows as oil surged on Hormuz disruption; dollar steadied, inflation and data watched.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-45162","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45162","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=45162"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45162\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=45162"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=45162"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=45162"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}