Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3550-1.3800
Euro 1.5550-1.5800
Sterling 1.8000-1.8250
WTI Oil (opening level) $94.09
The CAD/USD is opening at 1.3670 ( 0.7315 )
While higher Oil prices typically support the CAD, the USD is gaining the upper hand in the current environment. The USD’s dominant role in the global financial system and strong demand for liquidity during periods of geopolitical stress continue to underpin the USD. Moreover, since Oil is priced in US Dollars, global buyers must hold USD to purchase energy supplies.
The US Dollar Index, which tracks the USD's value against a basket of six major currencies, is trading above 100.00, highest level since November 2025.
Meanwhile, markets worry that a prolonged rise in Oil prices could stoke inflation, potentially forcing central banks to keep interest rates higher for longer or even consider tightening.
As a result, traders have scaled back expectations for Federal Reserve interest rate cuts. Markets no longer fully price in even one 25-basis-point cut in 2026, marking a sharp repricing from earlier expectations before the conflict began, providing an additional tailwind for the USD. T
The Bank of Canada is expected to keep interest rates on hold through 2026.
Headlines
· Iran's Supreme Leader Mojtaba Khamenei pledged to keep the Strait of Hormuz closed and threatened further conflict escalation. President Trump prioritized stopping Iran's nuclear ambitions over oil costs. The blockade has halted 20% of global oil trade, forcing GCC production cuts, although some 30% of Hormuz Strait normal flow rates could be rerouted through Saudi and UAE pipelines, with Saudi Arabia saying its pipeline could hit full capacity in coming days. The IEA labelled the disruption historic, prompting a 400 million barrel release from reserves.
· The US trade deficit fell to $54.5 billion in January 2026, from December's $72.9 billion, outpacing the forecast of $66.6 billion. Exports increased 5.5% to $302.1 billion, driven by gold, metals, and computers, while pharmaceuticals fell. Imports decreased 0.7% to $356.6 billion, with drops in pharmaceuticals and vehicles, but rose for computers and telecom equipment.
· US housing starts rose 7.2% to an annualized 1.487 million rate, exceeding forecasts and marking three months of growth. Multi-family starts surged 29.1%, while single-family starts fell 2.8%. Construction increased in the South and Northeast, but declined in the West and Midwest.
· Canada's trade deficit rose to C$3.6 billion in January 2026 from C$1.3 billion in December. Exports fell 4.7%, driven by drops in vehicles and aircraft, partially offset by higher energy exports. Imports declined 1.1%, mainly due to decreases in vehicles and electronics. The US surplus narrowed to C$5.4 billion, and the deficit with other countries expanded to C$9.0 billion.
· US initial jobless claims fell 1,000 to 213,000 in early March, below expectations. Continuing claims fell by 21,000 to 1,850,000, indicating a stable labour market. Federal employee claims rose by 88 to 617, amid government shutdown concerns
Key Points
· Equities: Global stocks fell as $100 oil hurt sentiment, with the U.S. and Europe weaker while Asia stayed cautious into Friday.
· Volatility: Iran conflict, oil above $95–$100, VIX elevated near 27, inflation data ahead of FOMC
· Digital Assets: Bitcoin above $71k, altcoins firmer, regulatory optimism supports sentiment
· Fixed Income: US treasury yields continue to rise, as did Japan’s JGB yields Friday
· Currencies: The US dollar remains a safe haven as it set new local highs against the EUR and JPY.
· Commodities: Gold softened Thursday – concern for CB sales to fund oil purchases?