The Canadian dollar weakened by 0.3% to around 1.36 per USD on Friday, pressured by a sharp 12% drop in oil prices to $82 per barrel. The decline in crude followed reports that the Strait of Hormuz remains “completely open” to commercial shipping during a ceasefire between Israel and Lebanon, rapidly easing concerns over a potential global energy supply shock. As Canada is a major oil exporter, lower oil prices translate into reduced export revenues, weighing on the loonie.
The easing of geopolitical tensions has also helped cool inflation fears, prompting investors to bring forward expectations for interest rate cuts by the Bank of Canada. While the US Dollar Index (DXY) slipped to 97.7, the combined impact of cheaper oil and growing bets on looser monetary policy has curbed recent demand for the Canadian currency.
