- Oil prices rose on Tuesday after Iran fired missiles at Israel.
- Canada’s manufacturing business activity rose for the first time in seventeen months.
- The US dollar strengthened against most of its peers due to safe-haven inflows.
USD/CAD price analysis shows a return to bearish momentum as the Canadian dollar gains oil due to tensions in the Middle East. At the same time, the dollar was firm as investors bought haven assets amid geopolitical tensions.
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Oil prices rose on Tuesday after Iran fired missiles at Israel, escalating the war in the Middle East. The Israel-Gaza war has slowly expanded to include Iran and Lebanon, threatening to be a larger war that is likely to disrupt oil supplies. Supply disruptions will tighten the market, driving up prices.
Meanwhile, the Canadian dollar rose as Canada is a net exporter of oil. Consequently, an increase in oil prices results in higher revenues for the country, strengthening its currency. At the same time, optimistic domestic data were in favor of the madman. Namely, production business activity increased for the first time in the last seventeen months. Canada’s PMI rose from 49.5 to 50.4 in September, marking the expansion.
Meanwhile, the US dollar strengthened against most of its peers due to safe haven inflows. The conflict between Iran and Israel has dampened risk appetite, resulting in a rush to safer assets. However, as the lunatic also rose, USD/CAD fell.
Elsewhere, data from the previous session revealed steady US manufacturing business activity. Furthermore, the number of jobs has increased, indicating a strong demand for labor. The US ISM manufacturing PMI missed forecasts but was steady at 47.2. Meanwhile, there were 8.04 million job vacancies compared to forecasts of 7.64 million.
Market participants are now awaiting the all-important non-farm payrolls report for more clues on the Fed’s rate cut prospects.
USD/CAD Key Events Today
- US ADP Employment change excluding agriculture
USD/CAD Technical Price Analysis: Bears target support at 1.3425
From the technical side, USD/CAD price broke below the 30-SMA after finding resistance at the 0.5 Fib level. The bulls took over but failed to hold the price above the SMA. The price recently broke out of the bullish channel with an impulsive move that paused at the 1.3425 support level.
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If the next bullish move was corrective, the bears could put another impulsive foot down. Therefore, the price could break below the 1.3425 level to make lower lows.
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