The Canadian Dollar (CAD) remained steady against the US Dollar (USD) on Monday, with the USD/CAD pair trading around 1.3670, down modestly by 0.05% at the time of writing [1]. The US Dollar found some support following a stronger-than-expected US employment report, as the Bureau of Labor Statistics reported that the US economy added 115,000 jobs in April, compared to a revised 185,000 in March and surpassing market expectations of 62,000. The US Unemployment Rate held steady at 4.3%, matching consensus forecasts [1]. These data points reinforced expectations that the Federal Reserve may remain cautious about further monetary easing, with MUFG noting that the latest developments favor the Fed keeping interest rates unchanged [1].
Despite the positive US data, the Canadian Dollar limited the upside for USD/CAD, supported by a rally in crude oil prices. West Texas Intermediate (WTI) crude climbed toward $94.60 per barrel after US President Donald Trump rejected Iran’s latest proposal to end the conflict with Israel and the US. Additionally, Israeli Prime Minister Benjamin Netanyahu warned that the conflict with Iran was 'not over,' fueling fears of renewed escalation in the Middle East. Persistent tensions around the Strait of Hormuz have raised concerns over global energy supplies, supporting commodity-linked currencies like the CAD [1].
OCBC highlighted that the US Dollar remains highly sensitive to shifts in global risk sentiment and oil price dynamics, even after the release of stronger US economic data. The bank expects the US Dollar Index (DXY) to remain broadly rangebound in the near term [1].
On the day, the Canadian Dollar was the strongest against the Japanese Yen, gaining 0.34%, and also posted gains against other major currencies, including the US Dollar (+0.07%), Euro (+0.18%), and British Pound (+0.23%) [1].
CONCLUSION
The Canadian Dollar's resilience is being driven by elevated oil prices amid ongoing Middle East tensions, which are capping gains in the US Dollar despite robust US employment data. Market participants are watching for further developments in geopolitical risks and oil markets, with expectations for the US Dollar to remain rangebound in the near term.