USD/CAD Eyes Oil Spike as US-Iran Strikes Lift Crude, Yields Push Higher

European trading closed with oil holding firm gains after the US and Iran exchanged military strikes, with the IRGC claiming a supertanker caught fire following a naval mine attack in the Strait of Hormuz. The escalation revived supply-risk premia, though expectations of a prolonged stalemate rather than full disruption limited the downside for crude and capped further spikes. Higher oil prices offer support to the commodity-linked Canadian dollar, favouring USD/CAD downside, while energy-importing currencies such as the yen face terms-of-trade headwinds. Regional European yields pushed higher, with German state CPI prints adding to the rates narrative and lifting EUR/USD's yield backdrop, even as US futures traded lower into the new week. Gold initially rallied on Treasury demand but erased most gains after Fed Chair Kevin Warsh's comments retightened financial conditions, underscoring the dominance of real yields over safe-haven flows. Traders should monitor Hormuz headlines for volatility spikes, with CAD and NOK sensitive to crude, and CHF and USD the primary beneficiaries of any renewed risk-off escalation.