Insights 
VT 
The Canadian Dollar (CAD) maintains strength against a weaker US Dollar (USD). Its performance since recent Israel/Iran hostilities is average among major currencies.
Despite oil price rises, CAD hasn’t notably benefited, outperformed by NOK and MXN. CAD’s correlation with WTI is low, showing a negative 1-month correlation of –17% and a 10-day correlation of –38%.
Impact Of Geopolitical Events On Cad
Iranian supply disruption or compromised tanker traffic might raise crude prices, positively impacting CAD. Currently, CAD’s strength is primarily due to USD weakness, with progress at the G7 meeting potentially offering further support.
For now, the CAD trades near the fair value estimate of 1.3588. The downtrend in USD remains, with resistance levels at 1.3650/60 and 1.3730, and potential further losses towards 1.34. The market outlook incorporates risks, and thorough research is advised for those seeking to invest.
US Dollar is under pressure, and sustained losses can extend, impacting CAD further. Current discussions include geopolitical tensions, interest rate decisions, and China’s economic target, keeping global markets dynamic and affecting currency movements.
The Canadian Dollar has managed to hold firm, largely riding on the broader weakness in the US Dollar rather than any underlying strength of its own. Since the spike in tensions between Israel and Iran, the Loonie’s position has been neither especially strong nor weak compared to other major currencies—it sits roughly in the middle. In contrast, currencies like the Norwegian Krone and Mexican Peso, which usually move in step with energy prices, have done better. This tells us something quite direct: oil hasn’t been pulling its usual weight for Canada.
We’ve noticed that even with oil prices climbing, the Canadian Dollar isn’t responding the way it used to. The short-term figures back this up. Over the past month, the correlation between CAD and WTI crude stands at a slightly negative 17 percent. The most recent 10-day figure is even weaker, dipping to a 38 percent inverse correlation. So, oil—typically a driver for CAD—hasn’t been providing the expected boost.
Still, if tensions in the Middle East disrupt oil flows, such as Iranian exports or shipping in key sea routes, crude prices could surge yet again. If that happens, we should pay attention to whether previous relationships between CAD and oil pricing re-establish themselves. The impact on CAD would depend not only on the price move itself but also on how the Bank of Canada reacts and whether market participants shift expectations about future rate moves.
Factors Influencing Cad Movement
At present, CAD is trading very close to what many models estimate as fair value, with 1.3588 acting as an anchor. The broader downtrend for USD hasn’t reversed, which leaves space for more Canadian strength, assuming no sharp reversal in US data. There’s some resistance around 1.3650–60 and again at 1.3730. A move down to around 1.34 is not out of the question if this pressure on USD continues without interruption.
In the coming weeks, what matters isn’t just interest rates or oil alone, but rather how they interact with external risks—especially headlines around China’s economy, surprises from the G7 outcomes, or any fresh positioning around central bank timing. These moving parts all play into where capital flows, which in turn affects volatility and trend persistence.
More broadly, traders looking at CAD exposures should keep daily volumes, positioning data, and rate expectations in mind. We’ve seen currencies react faster than usual to shifts in forward-looking guidance, and CAD is no exception. Moves from here could unfold quickly if global risk appetite changes direction.
Watching the slope and strength of the USD downtrend remains central. If that path continues lower, additional CAD strength seems likely. But watch for inflection points. A shift in geopolitical momentum or unexpected resilience in US data could quickly support a USD rebound, especially if bond yields materialise above current consensus.
In this kind of pattern-driven market, reacting only to headlines or one-day price moves won’t be enough. Hold a close view on cross-asset moves—especially commodities and yields—and avoid relying too heavily on historical correlations that may not be active right now.
