USD/CAD: The Impact of War and Oil!

٩ أكتوبر ٢٠٢٣

During the first Asian session on Monday, the exchange rate between the US dollar (USD) and the Canadian dollar (CAD) continued to decline for the third consecutive session, settling around 1.3650. This drop is primarily influenced by a significant increase in oil prices, presumably linked to the ongoing military conflict between Palestine and Israel. This situation is putting pressure on the Canadian dollar, especially considering that Canada is the main oil exporter to the United States. Additionally, positive employment data in Canada may have helped support the value of the Canadian dollar. In September, a significant increase in new jobs (63.8K) was recorded, surpassing market expectations (20.0K) and exceeding the 39.9K in August. The unemployment rate remained stable at 5.5% for the month, in line with market expectations of 5.6%. The market is attentive to the escalating military conflict between Palestine and Israel, as this situation could have global geopolitical implications if it intensifies and spreads to other parts of the region. The US dollar (USD) rebounded after three consecutive days of losses, stabilizing around 106.20, thanks to strong Nonfarm Payrolls data released last Friday. In September, a significant increase in new jobs (336,000) was reported, surpassing market expectations of 170,000. The revised figure for August was 227,000. However, the average hourly earnings (MoM) remained steady at 0.2% in September, below the expected 0.3%. On an annual basis, a 4.2% increase was reported, below the anticipated steady figure of 4.3%. US Treasury yields also increased, driven by expectations that the Federal Reserve (Fed) will maintain higher interest rates for an extended period. At the time of writing, the 10-year US Treasury bond yield is around 4.80%, close to the 2007 peak. Investors will closely monitor the upcoming meeting of the International Monetary Fund (IMF), during which strategies to stabilize international exchange rates and promote economic development will be discussed. Additionally, attention will be focused on the US Core Producer Price Index later in the week, as it plays a crucial role in analyzing inflationary trends and economic conditions in the United States. Furthermore, I would like to point out an important resistance/support zone at the level of 13640, in which it will be important to evaluate a potential price reaction for considering a possible short or long entry. Moreover, a bearish trendline configuration has formed, making one think more about a structural change to the downside at this moment. Let me know what you think, happy trading to all, greetings from Nicola, CEO of Forex48 Trading Academy.