USD/CAD Market Update

USD/CAD Slides to 1.3669 – Monday, April 20, 2026

Current Level: Mid-1.36s (24hr range 1.3674–1.3708)

USD/CAD is trading at 1.3677 this morning, down 16 pips from Friday's close as the Canadian dollar holds firm despite a broader risk-off tone. Iran's re-closure of the Strait of Hormuz over the weekend has revived safe-haven flows into the US dollar, Swiss franc, and Japanese yen, reversing part of last week's de-escalation trade. Canadian inflation data released this morning came in softer than expected, reinforcing the case for a patient Bank of Canada at next Wednesday's policy meeting.

Market Overview:

Risk appetite is faltering after Tehran attacked shipping in the Strait of Hormuz and the US maintained its blockade of Iranian ports, seizing an Iranian-flagged cargo vessel. Equities are on course to snap a five-day winning streak, global bond yields are pushing higher, and safe-haven currencies are outperforming commodity-sensitive counterparts. WTI crude has retaken the $87 per barrel level on renewed supply disruption fears, while the dollar index is inching higher from last week's 97.9 low. Importantly, according to Corpay's review of positioning data, speculators remain crowded into shorts against the Canadian dollar, pound, yen, and Australian dollar, suggesting that any renewed easing in Middle East tensions could see most majors outperform the greenback.

Strait of Hormuz Re-Closure Revives Risk-Off Tone:

Over the weekend the IRGC announced that the Strait of Hormuz was closed to commercial shipping due to heightened military tensions, threatening to attack vessels attempting passage. The closure comes only days after the US and Iran reached an agreement to reopen the Strait, casting doubt on an imminent peace deal and threatening a prolonged energy shock. The two-week ceasefire is set to expire tomorrow, April 21, adding another source of uncertainty. CIBC views these headlines as leaning bearish but maintains a base case that talks will continue and a deal will ultimately be reached. Convera frames today as the start of Week 8 of the conflict, with a partial reversal of last week's gains likely in the familiar defensive pattern of a stronger dollar and elevated oil prices.

Canadian CPI Prints Softer Than Feared:

Statistics Canada's March CPI release this morning showed headline inflation climbing 2.4% year-over-year, accelerating from 1.8% in February but missing the 2.6% consensus. The jump was driven almost entirely by a 21.2% year-over-year rise in gasoline prices. Core inflation, measured as the average of trim and median, rose 2.25% versus 2.30% in the prior month. CIBC's economists expect headline inflation to spike to around 3% next month if gas prices rise further, but believe a weaker economy should keep broader inflation contained. Swap-implied odds of a rate hike by year-end are slipping, reflecting hopes the Bank of Canada will follow its long-standing playbook of looking through volatile commodity price swings. Markets now price roughly a 6% probability of a 25 basis point cut at the April 29 meeting, with the policy rate widely expected to remain at 2.25%.

Fed Watch:

The CME FedWatch tool shows a 97.9% probability that the Federal Reserve holds rates at 4.25% to 4.50% at the April 29 FOMC meeting. Tomorrow's focus will be on Kevin Warsh's Senate Banking Committee hearing on his nomination to replace Jerome Powell. Warsh will face questions on his commitment to central bank autonomy, his plans for reforming the institution's operating structure, and his willingness to cut rates at the president's request. Procedural hurdles, notably Republican Thom Tillis's threat to block progress over the administration's probe into the Fed's building costs, could still derail the timeline. Markets will parse Warsh's answers closely for signals on the future policy path.

Technical Picture:

Resistance: 1.3750 marks near-term resistance where last week's decline originated, followed by 1.3800 as the more significant level that capped price action through mid-April.
Support: 1.3625 is the first meaningful support, with CIBC's 1.3500 target representing the next structural level on any sustained break lower.
Outlook: CIBC strategists see risks that USD/CAD could retrace some of its recent selloff as Iran war normalization takes longer than priced, but they would use any rally as an opportunity to sell, with their 1.3500 target intact.

Week Ahead:

Tomorrow's US retail sales release is the immediate focus, with headline spending expected to jump in line with higher gasoline prices while control-group sales come in substantially weaker. The headline event of the week for North American FX is the back-to-back Bank of Canada and FOMC decisions on April 29, both of which are expected to be holds. The April 30 cluster of Bank of England, ECB, and Canadian GDP releases closes out a heavy central bank calendar.

Other Notes:

• The DXY index has dropped roughly 2.5% from its April 7 peak near 100.6 to 97.9, closely tracking the historical oil-beta relationship on the downside.
• EUR/USD is holding above 1.17 despite weekend escalation, roughly where it sat in late February before hostilities intensified; Convera's short-term fair-value model points to the low-1.17s.
• The April 22 ceasefire deadline is widely expected to be extended, with both sides appearing motivated to find a diplomatic off-ramp.

This commentary is provided for informational purposes only and should not be construed as investment, legal, or tax advice. Past performance is not indicative of future results. Please consult with qualified professionals before making any financial decisions. Vantry Capital Inc.