If Israel attacks Iranian oil facilities, the Canadian dollar may also rise!
On October 2nd, foreign exchange analyst Gary Howes stated that if the conflict in the Middle East intensifies, the Canadian dollar may rise.
Israel may strike Iran's oil infrastructure in retaliation for Iran's overnight ballistic missile attacks.
This development will lead to a significant increase in crude oil prices and drive up oil related assets such as the Canadian dollar.
Israeli officials have stated that they are considering a "significant retaliation" against Tuesday's large-scale missile attack by Iran, which could potentially strike oil production facilities and other strategic bases within Iran's borders within a few days.
Francesco Pesole, foreign exchange strategist at Dutch International Bank, said that the rapid escalation of tensions in the Middle East will lead to an increase in oil prices and a decline in beta high currencies against the US dollar and Canadian dollar.
The Canadian dollar is usually not considered a traditional "shelter" for geopolitical tensions, but the market does note that in 2024, the Canadian dollar tends to track its North American currency against the pound, euro, and other currencies.
Pesole stated that oil prices are also a direct factor driving demand for the Canadian dollar.
He explained, "Against the backdrop of escalating geopolitical tensions, the US dollar has risen, and the Canadian dollar has also risen due to the rise in oil prices and the movements of safe haven currencies such as the Swiss franc and the New Zealand dollar
Therefore, the escalation of the Middle East conflict may open a window for the short-term performance of oil prices and the Canadian dollar.
Daily chart of USD/CAD exchange rate
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