US Dollar Shakes Off Syrian Intervention Concerns with 0.3% USD/CAD Exchange Rate Rise
The US Dollar’s advance against the Canadian Dollar today has come at a troubling time for the US, as the country appears to once again be on the brink of war in the Middle East.
Echoing events from a year ago, in the wake of a suspected chemical weapons attack by the Syrian government US President Donald Trump has threatened to attack Syria.
At the time in 2017, Trump limited his actions to a solitary missile strike on an airbase, but all signs point to a more protracted engagement this time round.
Escalating the conflict this time round is Russia’s involvement as a key backer of the Syrian regime.
Russia’s representative to the UN, Vassily Nebenzia, has warned against US involvement in the area; President Trump has responded provocatively to the statement.
In brighter US news, the US Dollar has gained some support from the latest Federal Reserve minutes, released on the evening of 11th April.
The minutes suggest that Fed officials are gearing up for several more US interest rate hikes in 2018, something that traders have long been hoping for.
Apart from speeches from Fed officials later today and over Friday, the US Dollar could next be affected by Friday afternoon’s University of Michigan consumer confidence reading.
The preliminary estimate is tipped to show a slight decline in optimism levels, which could worsen the US Dollar to Canadian Dollar exchange rate.
Canadian Dollar to US Dollar Exchange Rate Declines despite Oil Prices Hitting 3-Year High
The latest Canadian Dollar to US Dollar movement has been disappointing, with the pairing declining by -0.3%.
Additional losses have been seen against the Pound and New Zealand Dollar; in the latter case a -0.5% drop has been recorded.
This deterioration of the Canadian Dollar’s value comes despite a sudden upwards surge in the price of crude oil, which is closely linked to the increased risk of a US-Syria war.
Because a large amount of global oil production takes place in the Middle East, there are fears that a full-blown conflict could lead to disrupted production and therefore lower supplies of the resource.
Canada is another major extractor and exporter of crude oil, so news of spiking oil costs would usually boost Canadian Dollar demand.
As such, it is mainly the US Dollar’s recovery because of the Fed minutes that has prevented a CAD/USD exchange rate rally being seen.
The Bank of Canada (BOC) will factor into next week’s Canadian Dollar movement, when the bank makes its monthly interest rate decision on 18th April.
BOC policymakers aren’t expected to adjust rates from the current 1.25% level, but could still enable a Canadian Dollar advance if they hint at higher interest rates in the coming months.