Ella 
USD/CAD extended gains for the fifth consecutive day in Asia on Wednesday, moving higher towards the psychological level of 1.3500. The geopolitical situation in the Middle East prompted investors to take a cautious stance, which in turn supported the US dollar against other major currencies, including the Canadian dollar (CAD).
Falling crude oil prices weighed on the Canadian dollar (CAD), providing support to the USD/CAD pair. Canada is the largest oil exporter to the United States and is particularly sensitive to oil price fluctuations. WTI oil prices are currently hovering around $72.10 after recent losses.
The downward pressure on WTI oil prices is partly due to a slight increase in net production from U.S. crude production facilities this week. In addition, the completion and expansion of Canada’s Trans Mountain pipeline plays an important role in moving crude oil from production areas to refineries and export terminals. An increase in Canadian crude oil production in November made Canada the world’s fourth-largest crude producer.
In the United States, the U.S. dollar index (DXY) maintained its winning streak, driven by rising U.S. bond yields. Traders remained restrained on pricing in possible interest rate cuts from the Federal Reserve, providing upside support for the dollar. The Israel-Gaza conflict is still likely to continue to escalate, turning the market’s positive sentiment into caution, leading to increased demand for the dollar.
