Ella 
In early Asian trading on Monday, USD/CAD fell for the third consecutive trading day, falling to around 1.3650. USD/CAD is facing challenges from a sharp increase in oil prices, which may be caused by the Palestinian-Israeli military conflict.
The Palestinian-Israeli military conflict may trigger a new round of surge in oil prices. Rising geopolitical tensions could impact the Canadian dollar, especially as Canada is the largest oil exporter to the United States.
West Texas Intermediate crude oil prices extended gains for the second day, with WTI oil prices rising to around $85.80 at press time.
In addition, strong employment data from Canada may provide support for the Canadian dollar against the US dollar, with the net employment change in September being 63.8 thousand, higher than the expected value of 20 thousand, and August’s 39.9 thousand. In addition, the unemployment rate in September was still 5.5%, while the expected value was 5.6%.
Markets are closely monitoring the resumption of military conflicts in the Middle East involving Palestine and Israel. The concern is that the conflict has the potential to escalate and expand, triggering geopolitical uncertainty that could impact global markets.
The U.S. dollar index rebounded after falling for three consecutive days and was trading around 106.20 at press time. The dollar’s strength can be attributed to strong U.S. non-farm payrolls data released on Friday.
September employment data showed that U.S. non-farm payrolls increased by 336,000, which was stronger than expectations of 170,000. Nonfarm payrolls were revised to 227,000 in August. However, U.S. average hourly earnings (monthly rate) remained stable in September at 0.2%, 0.3% lower than expected. The report showed average hourly earnings increased at an annual rate of 4.2%, missing expectations of 4.3%.
U.S. Treasury yields also rebounded, driven by expectations that the Federal Reserve will keep interest rates higher for an extended period. As of now, U.S. Treasury yields are once again at 4.80%, close to their peak since 2007.
Investors may focus on the upcoming International Monetary Fund (IMF) meeting, which will discuss strategies to stabilize international exchange rates and promote development.
In addition, investors will also focus on the U.S. core producer price index due later this week, as the data plays a crucial role in measuring U.S. inflation trends and economic conditions.
