Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3720-1.3970
Euro 1.6050-1.6300
Sterling 1.8460-1.8710
WTI Oil (opening level) $104.01
The CAD/USD is opening at 1.3845 ( 0.7223 )
USD/CAD struggles to extend its rebound, caught between support for the CAD from surging Oil prices and expectations of higher interest rates in the USA.
Oil prices have surged at the start of the week, with WTI gaining nearly 7% . The move comes as geopolitical tensions between the US and Iran intensify following the collapse of diplomatic talks over Iran’s nuclear program. Concerns about potential disruptions to global energy supply, particularly around the Strait of Hormuz, are fueling the rally in Crude Oil prices.
This rise in Oil prices supports the CAD due to the importance of the energy sector in Canada’s economy. As Canada is the largest Crude Oil exporter to the United States, higher Oil prices tend to strengthen the Canadian currency, limiting gains in the USD/CAD pair.
The collapse of negotiations between Washington and Tehran has revived risk aversion in financial markets, leading to heightened concerns about inflation and stronger demand for the US currency. Moreover, the sharp rise in energy prices has rekindled inflation concerns, which could prompt the Federal Reserve to maintain a restrictive monetary policy stance for longer than previously expected.
These expectations have pushed US Treasury yields higher, providing additional support to the USD. In this context, the USD/CAD pair remains caught between two opposing forces: stronger Oil prices supporting the Canadian Dollar and expectations of a more hawkish Fed, keeping the pair broadly stable at the start of the week.
Headlines
· In Hungary’s general election, the long-ruling Fidesz party headed by Prime Minister Viktor Orbán lost in a landslide to the opposition Tisza (Respect and Freedom) party, which gained a more than two-thirds majority in parliament. This supermajority will allow Tisza and its leader Péter Magyar to change Hungary’s constitution. EU leaders celebrated the result as Orbán had held up key EU initiatives including support for Ukraine’s war effort. European Commission president Ursula von der Leyen said “Hungary has chosen Europe…The union grows stronger.”
· Trump announced a US blockade of the Strait of Hormuz after talks with Iran collapsed. From 10 a.m. Eastern, vessels entering or leaving Iranian ports will face restrictions. Washington said Tehran refused to curb its nuclear programme, while Iran had sought control of the strait, reparations, a broader ceasefire, and access to frozen assets. The shutdown of this critical shipping route has driven energy prices sharply higher, lifting inflation risks and reinforcing expectations that central banks may delay easing or even maintain tighter policy for longer. Iran was still exporting crude and condensate from the Persian Gulf in March, with China the primary destination, and the latest escalation risks further straining US–China relations.
· The Michigan Consumer Sentiment Index sank 11% to a record low of 47.6 in early April 2026, well below expectations of 52 and 9% under last year. With most surveys taken before the cease-fire, the Iran conflict’s impact was clear. Sentiment fell across all groups: one-year business expectations dropped 20%, personal finances 11%, and buying conditions for durables and vehicles worsened. Year-ahead inflation expectations jumped to 4.8% from 3.8%, and long-term expectations rose to 3.4%.
· US inflation rose to 3.3% in March 2026, the highest since May 2024 and up from 2.4% in January and February, driven by a 12.5% jump in energy costs tied to the Iran war. Gasoline climbed 18.9% and fuel oil 44.2%, while used-car prices fell 3.2%, shelter held at 3%, and food eased to 2.7%. Monthly CPI rose 0.9%, the biggest gain since June 2022, led by a 21.2% gas surge. Core inflation reached 2.6% year over year, with core prices up 0.2% on the month.
· US core consumer prices rose 0.2% in March 2026, matching February and slightly below the expected 0.3%. Transportation services climbed 0.6%, reflecting indirect effects of higher energy prices after war-related disruptions in the Strait of Hormuz.
· Airports have said jet fuel could run short within three weeks in Europe if oil supplies do not start to flow through the strait of Hormuz, raising concerns over flight cancellations across Europe going into the summer holiday season. The warning came from Airports Council International (ACI) Europe, which wrote to the EU’s energy and transport commissioners saying the bloc is three weeks away from shortages.
Key Points
· Equities: Equities ended mixed in the U.S. and Europe, then turned lower in Asia as Hormuz fears displaced ceasefire relief.
· Volatility: geopolitics, oil-driven risk, earnings season start, VIX firming
· Digital Assets: resilient BTC/ETH, selective alt strength, IBIT/ETHA demand, mixed options flow
· Fixed Income: Global bond yields rise on the jump in crude oil prices.
· Currencies: USD rebounds, if modestly, on the surge in crude oil prices after US-Iran cease-fire talks failed.
· Commodities: Crude back above USD 100 after Trump escalates tensions; metals weaken as USD and yields rebound