Canadian dollar strengthens as oil rally offsets trade and Fed concerns By Investing.com

Investing.com -- The Canadian dollar strengthened against its U.S. counterpart on Tuesday, supported by a sharp rise in oil prices as escalating Middle East tensions raised concerns about disruptions to global energy supplies. The loonie was trading 0.2% higher at C$1.3788 per U.S. dollar, or 72.53 U.S. cents, after moving between 1.3776 and 1.3819, according to Reuters market data. USD/CAD was around 1.3802 at 9:37 a.m. ET, down about 0.09% on the day. The Canadian currency has drawn support from oil, one of Canada's major exports, after crude prices surged to multi-month highs following attacks on Saudi energy facilities and growing concerns over tanker traffic through the Strait of Hormuz. U.S. crude futures were last around $92.73 a barrel, according to Reuters data. The oil rally is helping offset pressure on the loonie from last week's Canadian employment data, which showed the economy lost 41,700 jobs in August, while U.S. payrolls rose 162,000. The divergence initially pushed USD/CAD higher as investors reassessed the relative outlook for the Federal Reserve and Bank of Canada. Canada also escalated its trade dispute with the United States on Tuesday, putting retaliatory tariffs on C$20 billion of U.S. goods into effect after bilateral negotiations stalled. The measures add another source of uncertainty for the Canadian economy and the currency, given Canada's heavy reliance on the U.S. market. Markets are now looking toward U.S. inflation data later this week for clues on the Federal Reserve's September policy decision. A stronger-than-expected inflation reading could bolster the U.S. dollar and limit the loonie's gains, while softer data could reinforce expectations for easier U.S. monetary policy.