USD/CAD holds above 1.2670 as WTI loses ground on hopeful Iranian deal

• USD/CAD looks to defend offers as WTI has slipped near $106.
• Russia’s invasion of Ukraine has raised the odds of Iran's nuclear deal revival.
• The BOC seems to tighten policy further to reclaim 2% inflation target.

The USD/CAD pair has attracted some significant bids near 1.2645 as the West Texas Intermediate (WTI) has witnessed a halt in its firmer bullish journey near $116.00. Oil prices took a hit on Thursday after IAEA chief Rafael Mariano Grossi said his trip to Tehran could pave the way to reviving the Iran nuclear deal. The revival of the Iran nuclear deal would return the oil supply and support the oil price harmony.

The market participants are aware of the fact that the oil supply bottlenecks will stay as long as the second-largest exporter of oil, Russia is banned to export amid the collapse of the SWIFT international banking system and has been isolated by the majority of the nations. This has been boiling the oil prices for a while.

In times when the world economy is facing the oil crisis amid Russia’s invasion of Ukraine, the odds of sanctions waivers on Iran have been raised principally. The whole process may take time to get onboard but optimism may revive soon.

Now, that the oil supply could return to the market and deviation in demand and supply may fix to an extent, investors have started underpinning the greenback against the Canadian dollar. The loonie has jumped on expectations of lower inflows to Canada amid a fall in oil prices.

Meanwhile, Bank of Canada (BOC) Governor Tiff Macklem late Thursday stated that “At our next monetary policy decision in April we will certainly have a discussion about ending the reinvestment phase and starting quantitative tightening”. It is worth notifying that the BOC has increased their interest rate to 0.5% on Wednesday and the Canadian dollar has failed to capitalize upon the same.

The US dollar index is juggling near 97.73 ahead of a fresh trigger to resume rallying again. This may extend gains in the loonie further.