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Oil is the cause, and in Canada oil is a rate story. In the hour into the European open the Canadian dollar rose a median 10.4 basis points against all seven of its major counterparts — 14.6 against the US dollar, 10.5 against the euro, 10.4 against sterling — with no Canadian release anywhere in the window and nothing scheduled inside the hour itself.

What sits behind it is crude. WTI is above 92 dollars a barrel and Brent above 96, the highest since July, held there by the disruption in the Strait of Hormuz, where about 7 million barrels a day of crude and refined fuels are now transiting against roughly 20 million before the war began.

Dollar-Canada has fallen for a second consecutive day to around 1.3800, its weakest since early June. For most of the board a crude price at three-month highs is a tax. For Canada it is a rate path, and that is the distinction the market is trading. Higher fuel costs have already carried Canadian inflation to 3 percent against a 2 percent target, and when the Bank of Canada held at 2.25 percent on 2 September, Governor Macklem said policymakers were prepared to raise borrowing costs multiple times if inflation stayed too high — a hawkish hold from a bank whose three previous moves were all cuts.

Markets now price roughly 40 percent for an October hike, close to 90 percent for December, and a peak near 3 percent. Every dollar crude adds tightens that expectation, and the currency is being bought as such: it was the firmest thing on the board in an hour when the euro, sterling and the Australian dollar all finished within a fifth of a basis point of flat.

What makes the bid notable is the day it arrived on. Canada's counter-tariffs took effect this morning — more than 700 US product lines at 15 to 50 percent, about C$27.6 billion, matched dollar for dollar against Washington's, after trade talks collapsed in August with the prime minister calling the American terms a miscalculation.

The market bought the currency anyway. Its judgment, for now, is that the oil-and-rates channel is bigger than the trade channel, and it is not waiting to see the tariffs work before saying so. The hour's second question is the yen, and it is a continuation rather than a new event.

It fell a median 15.9 basis points to all seven counterparts, a larger give-back than the previous hour's 13.6 and its second losing hour after four consecutive buying hours. Every leg sits between 11.7 against the dollar and 26.4 against the Canadian dollar — the same narrow, uniform shape as last hour, which is one position being reduced rather than a rotation.

The timing is the plainest part of it: this hour spans the Tokyo close and the handover to Europe, and the book that bought the yen all session is the book going home. The only Japanese print anywhere near the hour argues the other way — the Economy Watchers survey came in at 46.4 against a 46.3 forecast and 45.7 previously, a beat, and the yen fell through it.

Nothing in the underlying case has changed: wage growth at 4.7 percent on the year against a 3.8 percent forecast, the quarter revised to 0.4 percent, a September hike priced, and the currency still almost 4 percent stronger this month and the best performer in the G10 after a seven-month high earlier in the session.

What stopped is the flow, and what has come back hour for hour is still smaller than the 31.9 basis points that topped the run. The two questions meet in one place: the board's largest single move is the Canadian dollar against the yen at 26.4 basis points — the hour's strongest currency against the one being unwound.

Everything else is those two facts and their shadow. The US dollar is lower against six of its seven counterparts and higher only against the yen, so the softness is not a dollar story even with bets on a Federal Reserve hike rising. The New Zealand dollar is firmer for a second hour after two hours of being sold 18 basis points as the funding leg, and it is softer only against the Canadian dollar.

The franc is third firmest and did nothing that looks like a haven bid. Ahead, Bank of England Monetary Policy Report hearings are the only scheduled test before New York opens its first full session since Monday's holiday, owing answers at once on a yen at seven-month highs, on Canadian tariffs that are now real rather than announced, and on its own week — American inflation on Friday, the Federal Reserve on the 15th and 16th. The 155.20-155.25 floor the yen broke on Monday is still overhead and still untested from below.