Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3480-1.3730
Euro 1.5800-1.6050
Sterling 1.8300-1.8550
WTI Oil (opening level) $105.59
The CAD/USD is opening at 1.3609 ( 0.7348 )
Analyst argue that higher Oil prices are giving the CAD temporary support, but warn that a fragile Canadian economy and upcoming USMCA talks could trigger setbacks.
1.37 forecast for the first half, looking for lower USD/CAD only once Bank of Canada hike interest rates, while timing and trade negotiations become clearer later in the year.
Higher oil prices are likely to be only a short-term rebound for CAD, unless the Canadian real economy recovers sustainably. The USMCA negotiations, which are due to begin in July, will further complicate matters.
CAD should outperform the USD in the event of an oil price shock, given that Canada relies much more heavily on energy exports than the US does. But in reality, the USD/CAD forecast of 1.37 for the first half of the year is still in place.
Headlines
· Oil remains the macro anchor as markets watch whether the US plan to help free ships stuck around the Strait of Hormuz can ease supply pressure. Brent slipped on Monday, but stayed above 100 USD per barrel as negotiations remained stuck and shipping risk stayed high. For investors, the message is simple: oil is still doing macro policy work, sadly without a job title.
· Central banks are moving back into inflation-watch mode. Higher energy prices are pushing the European Central Bank and Bank of England closer to possible rate hikes in June, even as growth remains fragile. The Bank of England kept rates unchanged last week, but one member already voted for a 0.25 percentage-point hike.
· Trade risk is back in Europe. President Trump’s plan to lift tariffs on EU cars and trucks to 25% from next week adds pressure to automakers already dealing with higher energy costs and weaker consumer confidence. Markets will watch whether Brussels retaliates or tries to keep the disagreement in the “annoying but manageable” bucket.
Key Points
· Equities: US records held, Europe faced tariff noise, while Asia’s AI supply chain kept pulling investors back in.
· Volatility: VIX ~17, KOSPI surge supports sentiment, event-heavy week ahead, oil and geopolitics in focus
· Digital Assets: BTC ~80k, ETH steady, altcoins higher, IBIT/ETHA inflows support sentiment
· Fixed Income: US 10-year yield ~4.37%, Treasury borrowing update ahead, Fed speakers, payrolls in focus
· Currencies: USD mixed, yen intervention focus, AUD firm before RBA, NOK supported by energy
· Commodities: Brent above USD 100, Hormuz shipping hopes, Kuwait exports disrupted, gold supported