US Dollar Canadian Dollar (USD/CAD) Exchange Rate Edges Up as US Tighten Iran Sanctions
The US Dollar Canadian Dollar (USD/CAD) exchange rate edged up and the pairing is currently trading at an inter-bank rate of CA$1.3370.
On Tuesday the Dollar index rose, edging closer towards the 2019 high that was seen in early March.
Meanwhile, America announced its goal is to impose a total oil embargo on Iran.
In a statement, US Secretary of State Mike Pompeo said:
‘Today I am announcing that we will no longer grant any exemptions. We’re going to zero. We will continue to enforce sanctions and monitor compliance. Any nation or entity interacting with Iran should do its diligence and err on the side of caution. The risks are simply not going to be worth the benefits.’
However, the Chinese Foreign Ministry told reporters that removing the waivers on Iranian sanctions would cause ructions in energy markets and destabilize the Middle East.
This likely benefited the safe-haven USD.
Canadian Dollar (CAD) Muted despite World Oil Prices Close to Six-Month Highs
World oil prices jumped to close to six-month highs as the US tightened sanctions on Iran.
On Monday, the US demanded all buyers of Iranian oil cease purchases by 1 May or face sanctions.
The White House stated that it was working with top oil exporters (Saudi Arabia and the United Arab Emirates) to ensure the market was ‘adequately supplied’.
Commenting on this, Robert Carnell Chief Economist and Head of Research for Asia Pacific at ING, said oil prices are:
‘not so high that it crushes manufacturing by putting energy price inputs up, but it is producing a nice boost to oil producing nations.’
However, the oil-sensitive ‘Loonie’ was unable to rally against the US Dollar.
US Dollar (USD) Muted as US Home Sales Fall
Data revealed that US home sales fell further than expected in March.
Rising demand fueled by declining mortgage rates and slowing house price inflation was met with a lack of properties, particularly in the lower-priced segment of the housing market.
Corporate Economist at Navy Federal Credit Union, Robert Frick, said:
‘Given mortgage rates have dropped and home prices aren’t appreciating as quickly, there is more opportunity for home shoppers, who are gearing up for the spring season.
‘The major problem for home buyers is the low supply of homes, especially at the lower end of the market.’
US Dollar Canadian Dollar Outlook: Will USD/CAD Slide on a Disappointing US Housing Price Index?
Looking ahead to this afternoon, the Canadian Dollar (CAD) could rise against the US Dollar (USD) following the release of the Canadian wholesales sales.
If February’s sales rise, it could spark an upswing of support for the ‘Loonie’.
Also due for release on Tuesday afternoon is the US Housing Price Index.
If February’s prices do not rise as high as forecast, it could cause the US Dollar Canadian Dollar (USD/CAD) exchange rate to slip.