Markets Digest Hot U.S. Inflation as Iran Tensions Keep Oil Elevated
Publication: moneysavings.ca / Canadian Money Brief Date: Tuesday, May 13, 2026
The TSX opens cautiously Wednesday after hotter-than-expected U.S. CPI data rattled Wall Street on Tuesday, while Strait of Hormuz disruptions continue to lift energy stocks and pressure the loonie toward 1.35 against the greenback.
Market Overview
Canadian investors are starting Wednesday on a cautious note following a mixed session south of the border. U.S. equities dipped Tuesday after April's consumer price index came in at 3.8% — a touch above the 3.7% consensus forecast and the highest reading since May 2023 — while the core rate held at 2.8%, also above expectations. The data has effectively closed the door on any Federal Reserve rate cuts in 2026, with traders now pricing in a roughly 70% chance of a rate hike by April 2027.
For Canadians, the ripple effects are meaningful: a higher-for-longer Fed posture keeps upward pressure on the U.S. dollar, complicates the Bank of Canada's own easing path, and sustains the inflationary drag from elevated global energy costs.
TSX Snapshot
The S&P/TSX Composite closed at 34,291 on Tuesday, edging up 0.44% — a modest gain anchored almost entirely by the energy patch. Canadian Natural Resources surged 4.1%, Imperial Oil added 2.6%, and Cenovus Energy climbed 3.2% as oil prices held firm on geopolitical premium tied to the ongoing closure of the Strait of Hormuz. The conflict in Iran continues to be the single biggest macro driver for Canadian resource stocks.
Banks were mixed. Royal Bank of Canada rose 1.0% and TD Bank gained 0.8%, while BMO slipped 0.2% — the latter also announcing a deal to sell its transportation and vendor finance businesses to Stonepeak. Brookfield shed 0.5%.
Gold miners were the session's laggards as a firming U.S. dollar weighed on bullion. Barrick Gold fell 2.4% and Wheaton Precious Metals lost 0.5%.
Oil & Energy
West Texas Intermediate crude is trading around US$102 per barrel — a level not seen sustainably since the early 2020s — as the Strait of Hormuz closure squeezes global supply buffers. JPMorgan analysts warned this week that supply buffers are eroding and that "demand destruction" among energy consumers is now a growing risk. For Canadian producers, the math still looks attractive: WTI in Canadian dollar terms is sitting just below C$140 per barrel, a level reached only once before — briefly during the 2022 Ukraine invasion. Federal and provincial royalty revenues could benefit significantly, though analysts are urging caution given the fragility of any ceasefire framework.
The Loonie
USD/CAD is converging toward the 1.35 mark — a level not seen since 2024 — as the Canadian dollar gains support from high oil prices even as the U.S. dollar strengthens on hot inflation data. National Bank strategists note that the CAD is benefiting from the potential boost that elevated crude prices provide to Canada's trade balance and fiscal outlook, but caution that renewed U.S.-Iran escalation could quickly reverse that tailwind. The pair is likely to remain range-bound near current levels until there is greater clarity on both the Fed's path and Middle East diplomacy.
Gold
Spot gold is trading around US$4,721 per ounce Wednesday morning, under pressure from a stronger U.S. dollar and a repricing of rate expectations following Tuesday's CPI surprise. President Trump rejected Iran's latest peace proposal — calling it "totally unacceptable" — raising the possibility of renewed military operations and a prolonged Hormuz closure. While that geopolitical backdrop should theoretically support safe-haven gold, the combination of dollar strength and fading rate-cut bets is keeping bullion in check. In Canadian dollar terms, gold remains historically elevated near C$6,370/oz.
What to Watch Today
U.S.-Iran diplomacy: Trump is expected to meet with his national security team to weigh a potential restart of military operations and plans to escort commercial vessels through the Strait. Any shift in tone could move oil, gold, and the loonie sharply.
Trump–Xi meeting: The U.S. president is in China for a two-day summit covering Iran, Taiwan, AI, and nuclear issues. Trade-sensitive sectors in Canada — materials, industrials — may react to headlines.
Canadian bank earnings season: With BMO in the spotlight after its business-unit divestiture announcement, watch for further strategic commentary from major Canadian lenders.
Fed speakers: Several FOMC members are scheduled to address the markets; after Tuesday's CPI print, their tone on the rate path will be closely scrutinized by USD/CAD traders.
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