With mounting pressure on Iran from both the United States and Europe, Iranian officials have announced their intention to restart nuclear talks with global representatives.  Although US officials have said the efforts are being made on the heels of tightening sanctions from Western Powers, Iran’s nuclear negotiator Saeed Jalili noted that it was to work towards “constructive and forward looking cooperation”.

Still, we’ve been here before and even as Iranian officials open their borders to meetings with UN officials, it won’t guarantee a quick resolution – so, event risk still lingers.  The looming pressure is likely to support higher crude oil prices above $100 a barrel – in turn keeping the Canadian dollar ahead of the US dollar.  Positive price action relationships between the oil commodity and Canadian dollar have been in sync over the last couple of sessions – adding to speculation that the current direction will continue for both assets.  The price of petroleum has risen by over 6% since the beginning of the month – as the Canadian dollar has remained stronger against the dollar since the beginning of the year.  The loonie has appreciated by 3.1% since the end of December 2011.

Adding to current market sentiment is the fact that the Obama administration has dismissed the comments, stating that recent statements are a mere product of the recent pressure placed by the United States and its allies in Europe – signaling an unwillingness to cooperate at this point.  Ahead of yesterday’s announcement of nuclear achievements by Iranian President Mahmoud Ahmedinejad, US officials placed sanctions on Iranian assets, while European leaders highlighted a boycott of Iranian oil.  The moves prompted the Iranian government to propose a cutback to existing oil export contracts with six European nations – including France and Italy.

Trading at 1.0002 in the New York morning, the Canadian dollar has appreciated by 0.5% on the day against the greenback.

More on the Canadian dollar - Could Iran Drive the Canadian Dollar Higher, Against the Euro?