Why is USDCAD is up today?

Prolonged Middle East conflict is choking oil, gas, and fertilizer supplies, forcing India to hike import tariffs, raising global food-security concerns, and straining economies from France to Southeast Asia. Energy inflation is becoming structural rather than transitory.

Emerging-market currencies are under acute pressure as the dollar strengthens on higher US rates and geopolitical risk aversion. From Indonesia's rupiah hitting record lows to pressure on the Mexican peso and Philippine bonds, EM asset classes are facing a confluence of headwinds: capital flight, inflation, and weakened government finances.

The effective closure of the Strait of Hormuz due to US-Iran tensions is causing a historic oil supply shock, with crude rallying to multi-month highs and raising inflation expectations across markets. Central banks and investors are reassessing monetary policy as energy costs cascade through supply chains.

The Iran-US conflict has effectively shut the Strait of Hormuz, blocking roughly 100 million barrels of oil weekly and triggering the worst energy supply shock since World War II. Markets are pricing in extended disruption as peace talks stall and geopolitical tensions escalate.

The IEA warns that global oil inventories are depleting at a record pace due to the Iran war disrupting crude supplies from the Persian Gulf, setting up months of tight energy markets and elevated cost pressures for refiners, importers, and airlines. Supply normalization is months away, locking in a structural energy premium through at least Q3 2026.