On Tuesday (December 3rd), due to heightened political uncertainty in South Korea and fluctuating investor sentiment, the Canadian dollar fell slightly against the US dollar and weakened against some other major currencies.

USD/CAD is reported at 1.4068, with an intraday trading range of 1.4011 to 1.4075. In contrast, the euro regained some of its lost ground on Monday due to the easing of the political situation in France, becoming the only G10 currency to rise against the US dollar.

George Davis, Chief Technical Strategist for Capital Markets at Royal Bank of Canada, pointed out that the performance of Canadian dollar crosses has generally weakened, which is related to the decrease in risk sentiment caused by the late night announcement of martial law by the South Korean President. He added that the weakening of the US stock market further weakened the market's willingness to take risks, which had a negative impact on the Canadian dollar.

The political turmoil in South Korea has also put pressure on the Korean won, causing a significant drop in the exchange rate of the won against the US dollar, further exacerbating uncertainty in the regional market.

As a major exporter of oil and commodities, the Canadian currency is typically sensitive to changes in market sentiment. On Tuesday, although US crude oil futures rose 3% to $70.15 per barrel, this increase did not effectively support the performance of the Canadian dollar.

The reasons behind the rise in oil prices include Israel's threat to launch attacks on Lebanon and market expectations that OPEC+will announce an extension of the production reduction agreement. This week, Canadian investors will closely monitor the November employment report to be released on Friday.

Economists predict that there will be an increase of 25000 jobs in Canada, which may affect market expectations of future interest rate cuts by the Bank of Canada.

The yield of Canadian government bonds fluctuated, with the 10-year bond yield rising 1.8 basis points to 3.101%. On Monday, the 10-year bond yield hit its lowest intraday level in nearly two months at 3.053%.

Against the backdrop of global geopolitical uncertainty and rising market risk aversion, the performance of the Canadian dollar is under pressure. Although the rise in oil prices has provided some support for the Canadian economy, market sentiment still dominates the short-term trend of the Canadian dollar, and its subsequent performance may depend on the upcoming employment data and the policy expectations of the Bank of Canada.