USD/CAD & Oil Surge as Iran-Hormuz Crisis Sparks Risk-Off Sentiment

Broad risk-off sentiment dominated Americas trading as escalating US-Iran tensions over the Strait of Hormuz left markets with 'nowhere to hide.' President Trump characterized reopening Hormuz as 'a simple military manoeuvre,' while reports indicate the US has made detailed preparations for potential ground troops in Iran. A US assessment suggests Iran could keep Hormuz shut for one to six months, with Tehran reportedly unwilling to negotiate while under attack. Oil prices surged on supply disruption fears, with Fed's Waller warning that sustained high oil prices could bleed into inflation, complicating the Federal Reserve's policy outlook. Canadian economic data disappointed, with January retail sales rising 1.1% versus the 1.5% expected, while February producer prices came in at +0.4% m/m versus +1.1% forecast, suggesting softening domestic demand. The weak Canadian data combined with surging oil prices creates a complex backdrop for USD/CAD, as oil-linked CAD support is offset by deteriorating economic fundamentals. Traders should monitor geopolitical developments closely, as prolonged Hormuz disruption could significantly reshape central bank rate expectations and drive sustained volatility across commodity-linked currencies.