Canadian Dollar gains as market sentiment improves after US-Iran ceasefire

USD/CAD continues to lose ground for the third successive day, trading around 1.3830 during the Asian hours on Wednesday. The pair depreciates as the US Dollar (USD) declines on decreased safe-haven demand after the United States (US) and Iran agreed on a two-week ceasefire.

However, the downside of the USD/CAD pair could be restrained as the commodity-linked Canadian Dollar (CAD) may face challenges amid lower prices following the US-Iran ceasefire, given the fact that Canada is the largest crude exporter to the United States.

West Texas Intermediate (WTI) oil price trades around $89.80 per barrel, down by over 11%, at the time of writing. Crude oil prices weaken on easing supply fears after US President Donald Trump agreed to a two-week ceasefire with Iran on the condition that Iran agree to reopen the critical Strait of Hormuz.

Trump also said the US received a 10-point proposal from Iran, calling it a “workable basis for negotiations,” with a two-week window to finalize a deal. Iran also agreed to reopen the key waterway for two weeks if all attacks cease, while Israel has reportedly accepted the truce.

On the data front, Canada’s seasonally adjusted Ivey Purchasing Managers’ Index (PMI) fell to 49.7 in March from 56.6 prior, missing the 55.9 forecast and signaling contraction. Meanwhile, the US ADP Employment Change four-week average rose by 26,000 jobs from 15,250 previously, marking a third straight week of hiring gains.