- USD/CAD continues its winning streak on the upbeat US Dollar.
- The decline in the WTI price weakens the Canadian Dollar.
- US Dollar cheers the market sentiment change due to the Middle East conflict.
USD/CAD extends its gains for the fifth successive session, trading higher near to the 1.3500 psychological level during the Asian session on Wednesday. The geopolitical situation in the Middle East is prompting investors to adopt a cautious stance, which is in turn supporting the US Dollar (USD) against other major currencies, including the Canadian Dollar (CAD).
The decline in Crude oil prices is exerting pressure on the Canadian Dollar (CAD), consequently providing support to the USD/CAD pair. Canada, being the largest oil exporter to the United States (US), is particularly sensitive to fluctuations in oil prices. West Texas Intermediate (WTI) crude oil is hovering around $72.10 per barrel after recent losses.
The downward pressure on WTI prices is attributed, in part, to a slight increase in net output from US Crude oil production facilities during the week. Additionally, the completion and expansion of the Trans Mountain pipeline in Canada play a significant role in transporting Crude oil from production areas to refineries and export terminals. Canada's increased Crude oil production in November has positioned the country as the fourth-largest global producer of barrels.
On the US side, the US Dollar Index (DXY) maintains its winning streak, propelled by improved US bond yields. Traders are showing restraint in pricing in potential interest rate cuts by the Federal Reserve (Fed), providing upward support for the Greenback. The ongoing possibility of an escalation in the Israel-Gaza conflict has shifted the positive market sentiment to caution, leading to increased demand for the US Dollar.
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