Canadian Dollar Falls As Oil Prices Edge Lower

(RTTNews) - The Canadian dollar weakened against other major currencies in the European session on Friday, as the crude oil prices traded lower amid escalating U.S.-Iran tensions and concerns over prolonged disruption to global energy supplies.

Brent crude futures tumbled 2.7 percent to $104.68 a barrel but were still on track for their biggest weekly advance since July. WTI crude futures were down 2 percent at $100.44 a barrel.

In its latest monthly report, the International Energy Agency (IEA) predicted that world oil demand will drop by 2.5 million bpd this year, more than its previous forecast of a 1.6 million bpd decline due to record fuel prices. The IEA sees world oil supply declining by 5.7 million bpd this year.

Investors were also reacting to media reports suggesting that Iran and Oman were meeting with Gulf states to reopen shipping through the Strait of Hormuz.

The Financial Times reported that Gulf foreign ministers plan to meet their Iranian counterpart in the Omani coastal city of Salalah this coming Monday to secure a deal to manage commercial shipping through Hormuz.

Overnight, the Israeli military demolished key tunnels built by the Iran-backed Hezbollah group beneath the strategic Ali al-Taher ridge in southern Lebanon.

In the European trading today, the Canadian dollar fell to a 1-week low of 1.3848 against the U.S. dollar, from an early high of 1.3834. The loonie may test support around the 1.39 region.

Against the yen, the euro and the Australian dollar, the loonie edged down to 111.74, 1.6072 and 0.9900, respectively. If the loonie extends its downtrend, it is likely to find support around 110.00 against the yen, 1.59 against the euro and 1.00 against the aussie.

Looking ahead, U.S. CPI data for August, U.S. University of Michigan consumer sentiment for September and U.S. Baker Hughes oil rig count data are slated for release in the New York session.