USD Strengthens on Geopolitical Risk; Oil Prices Support Canadian Dollar

USD Strengthens Amid Geopolitical Tensions, CAD Buoyed by Oil

The US Dollar (USD) is gaining across the board Friday morning as investors flee to safety following news that Israel has launched airstrikes on Iranian military facilities. The sharp increase in geopolitical tension has sparked traditional risk-off behavior in global markets.

“The FX return distribution is consistent with classic risk aversion,” analysts noted, as high-beta currencies like the AUD, NZD, MXN, and SEK underperform, while the EUR and GBP also face losses.

CAD and NOK Hold Firm on Rising Oil Prices

Despite market stress, oil-linked currencies like the Canadian Dollar (CAD) and Norwegian Krone (NOK) are faring relatively well, thanks to the surge in crude oil prices.

• WTI crude is holding above $74 per barrel, sharply higher from Thursday’s $68/bbl close.
• Oil's jump follows worries about disruptions in global supply, particularly through the Strait of Hormuz.

Related: WTI Recedes from 5-Month Peak, Still Supported by Supply Fears

Safe Havens Act Unusually

While the USD is climbing, traditional safe havens like CHF and JPY are surprisingly underperforming relative to peers. This unusual behavior suggests market uncertainty about which assets are safest in current conditions.

Meanwhile, Treasury yields have reversed early declines and are trading slightly higher—another indication that market sentiment may be stabilizing.

Commodities Reflect Broader Risk Trends

• Gold has pushed to new local highs, benefiting from safe-haven demand
• Copper is trading lower, highlighting investor concerns over economic risk and sustaining a recent bearish reversal.

Conclusion

The USD remains strong amid intensifying global risk, supported by safe-haven flows. Meanwhile, oil's rally is providing a cushion to commodity-sensitive currencies like the CAD and NOK. Despite early risk-off panic, broader markets are attempting to stabilize ahead of the North American open.