USD/CAD extends its losses to near 1.3400 despite Middle East tension, focus on US data

• USD/CAD loses ground on downbeat Crude oil prices.
• WTI price depreciates for the second successive session despite heightened geopolitical Middle East tension.
• Biden’s administration could authorize military strikes on Iran-led Houthis.

USD/CAD continues to move downward for the fourth consecutive session on Tuesday, trading lower around 1.3400 during the European session. The Canadian Dollar (CAD) faces downward pressure due to the downbeat Crude oil prices, given Canada is one of the largest oil exporters to the United States (US).

West Texas Intermediate (WTI) oil price depreciates for the second day, edging lower to near $76.80 per barrel, by the press time. However, an intensification of geopolitical tensions in the Middle East is persistently amplifying concerns over the supply of oil. This development is emerging as a crucial factor, which could limit the losses of Crude oil prices.

Additionally, the Loonie Dollar (CAD) received some pressure from the remarks of the Bank of Canada (BoC) Governor Tiff Macklem. He has indicated a shift in focus, moving from discussing whether interest rates are sufficiently high to considering when they might be lowered.

The escalated tension in the Middle East is driving investors toward the US Dollar (USD), which in turn, underpins the USD/CAD pair. US President Joe Biden’s administration could authorize military strikes in response to the recent drone attack on a US outpost in Jordan.

Tuesday’s releases of the Housing Price Index and Consumer Confidence figures will be under scrutiny by market participants, aiming to glean additional insights into the US economic landscape. Furthermore, the Federal Reserve (Fed) interest rate decision will be out on Wednesday. On Canada’s docket, Wednesday’s Gross Domestic Product report is expected to show a slight increase in November.