Canadian Dollar holds firm as Oil prices climb amid Strait of Hormuz shutdown

USD/CAD Steady Amid Oil Price Surge and Geopolitical Tensions

The USD/CAD currency pair remains stable near 1.3670 during Tuesday's Asian trading session, following a slight increase in value the previous day. However, the Canadian Dollar (CAD) has strengthened, benefiting from rising Oil prices. As Canada is a leading exporter of crude, its currency often reacts strongly to shifts in Oil markets.

West Texas Intermediate (WTI) Oil is currently trading at approximately $71.60 per barrel. The ongoing conflict in the Middle East has fueled supply worries, keeping crude prices elevated.

According to a Reuters report, Ebrahim Jabari, a senior adviser to the commander-in-chief of the Islamic Revolutionary Guard Corps (IRGC), warned: "The Strait of Hormuz is closed. Any attempt to cross will result in the Revolutionary Guards and navy setting those vessels on fire."

Higher Oil prices may continue to bolster the CAD, sparking renewed concerns about inflation in Canada. Investors are wary that increased energy costs could prompt central banks to maintain elevated interest rates for an extended period.

Despite these factors, the USD/CAD pair's upward movement might be restrained, as the US Dollar (USD) could gain further strength due to heightened safe-haven demand amid intensifying Middle East tensions. US President Donald Trump indicated that a "big wave" of strikes against Iran is still forthcoming in the ongoing conflict.

Marco Rubio also noted that the US is bracing for a "significant increase" in attacks on Iran within the next day. The US and Israel have targeted thousands of locations in Iran, continuing their coordinated offensive after the death of Iran's supreme leader, Ayatollah Ali Khamenei.