USD/CAD closes at 1.40448 as shipping risks in Hormuz persist
Key Facts
The U.S. dollar traded at 1.40448 against the Canadian dollar at the close on October 26, up from 1.40011 on October 23, according to EL7 data. The move puts the pair at the center of currency-market attention, with concerns over energy flows through the Strait of Hormuz persisting and the Bank of Canada decision approaching. No confirmed, date-specific data are available on the dollar’s move against a basket of major currencies on October 26, so the comparison here is limited to the pair’s performance between the two cited closes. In an earlier market reading, a Reuters report on October 21 said the dollar was steady against most major currencies as demand returned for the currency as a safe haven. The report linked this to developments in the conflict and oil-related inflation concerns, as crude prices rose by more than $2 a barrel that day.
On October 21, the euro fell 0.1% to $1.122 and was down about 1% since the start of the month, according to Reuters. This came in a session when the dollar was steady against most major currencies, showing that safe-haven demand had not translated into a broad-based rise in the U.S. currency against all its peers. Oil also rose by more than $2 a barrel that day, as investors tracked the impact of regional developments on energy prices and inflation. On October 26, crude prices moved in the opposite direction, falling after climbing to near a six-month high during the previous week. Reuters said hopes for de-escalation between the United States and Iran supported the decline in oil, while Houthi attacks on Saudi Arabia kept supply concerns in focus.
Logistical risks center on the Strait of Hormuz, which oil tankers continue to transit under U.S. military protection, according to data and analysis from Lloyd’s List Intelligence cited by The Associated Press. Iran said 7 tankers caught fire or were damaged during the night of October 22, but the news agency could not independently verify the claims. The agency cited Lloyd’s List Intelligence as saying attacks on ships had reached 28 in October, the highest number since the war began. These events show that shipping remains exposed to disruption, while oil continues to pass through the strait. The Associated Press said a return to full-scale fighting could put the region’s oil, natural gas and fertilizer shipments at risk and trigger a fresh surge in prices.
In Saudi Arabia, Aramco CEO Amin Nasser said the East-West pipeline’s capacity had risen from 2 million barrels to 7 million barrels per day. The expansion provides an alternative route for transporting oil, while other tankers continue to transit Hormuz under U.S. protection, according to The Associated Press. In markets, spot gold rose 0.4% to $4,010.51 an ounce on October 26 as of 0544 GMT, after hitting its lowest level since mid-July in the previous session. An analyst at Capital.com attributed the rise mainly to relief from lower oil prices and said the move could remain limited as markets position themselves ahead of the Federal Reserve decision. Gold and oil movements highlight the differing responses of assets to changing assessments of supply risks and escalation.
In the United States, the Federal Reserve will hold its Federal Open Market Committee meeting on October 27 and 28, with the press conference scheduled for October 28. The Fed says the committee holds 8 regularly scheduled meetings each year and may hold additional meetings as needed. Having both decisions on the same day would put U.S. and Canadian monetary policy among the key developments to watch next for USD/CAD.