USD/CAD is about to close lower for the fifth consecutive session. Currently, the pair is trading at 1.3058, down 0.14% as of 4:35 PM UTC. The price has just updated the lowest level since October 29 and is trading dangerously close to the lowest level since July.
The Loonie is backed by oil prices, which have increased to three-month peaks, driven by optimism over the US-China trade deal. Besides, the market is closely watching the Middle East, as the US launched airstrikes in Iraq and Syria.
Earlier today, Brent was trading up 1% to $68.79 a barrel while WTI showed an increase of 0.55% to $62.06 a barrel. However, both crude brands have entered a correction phase and might close the session in red.
Edward Moya, an analyst at trading platform OANDA, commented:
“Oil prices continue to remain supported near frothy levels as tensions in the Middle East could see key disruptions in the region, shrinking U.S. stockpiles alleviate oversupply concerns and the U.S. and Chinese look to wrap up the phase-one trade deal.”
Yesterday, the US conducted airstrikes against Kataib Hezbollah militia group in Iraq and Syria. Protesters in Iraq led to a temporary closure of an oilfield.
Separately, Libyan state oil company NOC announced that it might close its western Zawiya port and evacuating workers from the refinery due to fights nearby.
Oil prices have been also driven by a drop in US crude inventories, which declined by 5.5 million barrels in the week ended December 2020, while analysts had expected a modest decline of 1.7 million barrels.
Both the Loonie and the Greenback are benefiting from optimism over the phase trade deal to be signed between the US and China. China’s Commerce Ministry said last week that Beijing was in close touch with Washington on holding a signing ceremony.
The world’s two largest economies finally agreed to shake hands on December 13. According to the interim deal, the US is cutting some tariffs on goods imported from China, while China will buy US farm products and other goods.
