- The geopolitical risk surrounding Iran helps oil extend the latest recovery.
- The US-China trade positive sentiment favors commodity-linked currencies.
- The USD struggles to carry previous strength forward.
With the oil prices gaining on the back of political headlines concerning Iran, USD/CAD retreats to its multi-month lows as it trades near 1.3060 during early Monday morning in Asia.
The Canadian Dollar (CAD) dropped Friday after monthly Retail Sales lagged behind the consensus. The overall US Dollar (USD) strength, due to reduced expectations of heavy monetary policy easing by the US Federal Reserve, also favored the pair buyers.
However, geopolitical factors supported oil, a key export item for Canada, off-late and triggered the quote’s pullback towards multi-month low.
Not only the US but the UK is also now at loggerheads with Iran after the Middle East nation seized British oil tanker in Strait of Hormuz.
Additionally, news reports from China signal the dragon nation’s readiness to import more of the US agricultural products, which in turn offers a boost to the US-China trade deal prospects.
Traders may now await fresh clues from Canadian Wholesales Sales (MoM) for May while keeping an eye over political news/headlines. The Wholesale Sales growth is likely to come in softer at 0.2% from 1.7% earlier.
Technical Analysis
1.3000 continues to be the key support for the pair, contrast to 21-day exponential moving average (EMA) level of 1.3110 being an immediate upside barrier.
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